Manufacturing Integration Technology (MIT)

[dreamybear]

Thanks to all the buddies who shared this opportunity - I had not followed this Co previously and is now scrambling to read all the documents. But I am still a little confused.

No. of issued shares based on FY2018 Results :  : 233,916,970
https://links.sgx.com/FileOpen/MIT_Annou...eID=545070

80% Payment Received : $67.6 mil (I assume this figure is inclusive of reimbursement of S$8 mil for the cash left by the Co  in  MIT Semiconductor ? )
20% Escrow                :  $16.9 mil
https://links.sgx.com/FileOpen/MIT_Annou...eID=544271

Per share basis
*80% Payment Received : $67,600,000/223,916,970 = $0.3
**20% Escrow : $16,900,000 / 223,916,970 =  $0.08
Total gains per share = $0.3+$0.08 = $0.38

*As shared previously, DPS to be distributed from 80% payment rec will be : $0.155+$0.085 = $0.24
http://infopub.sgx.com/FileOpen/Announce...eID=548365

**If Co distributes the $16.9 mil from 20% Escrow Account, it will be $0.07 per share - think this may be from one of the past new releases, together with the $0.02 per share ?

So in terms of per share,
share price(est)  vs  |    confirmed get    |   subject to conditions(Escrow)    |        NAV after distribution^
$0.355                    |       $0.24            |        $0.07                                 |       $0.19(of which $0.083 is cash)        

^I think the left over CEM portion of the Co. is currently loss making.

Is my understanding right ?
PS : still reading and trying to piece the picture before mkt starts on Mon.

[TerryT]

Non semiconductor segment fy18 losses of $1.287m

Estimated $7.4m expenses consisting commission to agent/ rewards & compensations for staffs etc

233,916,970 Shares excluding treasury.

[Supermonkey]

Thanks to all the buddies who shared this opportunity - I had not followed this Co previously and is now scrambling to read all the documents. But I am still a little confused.

No. of issued shares based on FY2018 Results :  : 233,916,970
https://links.sgx.com/FileOpen/MIT_Annou...eID=545070

80% Payment Received : $67.6 mil (I assume this figure is inclusive of reimbursement of S$8 mil for the cash left by the Co  in  MIT Semiconductor ? )
20% Escrow                :  $16.9 mil
https://links.sgx.com/FileOpen/MIT_Annou...eID=544271

Per share basis
*80% Payment Received : $67,600,000/223,916,970 = $0.3
**20% Escrow : $16,900,000 / 223,916,970 =  $0.08
Total gains per share = $0.3+$0.08 = $0.38

*As shared previously, DPS to be distributed from 80% payment rec will be : $0.155+$0.085 = $0.24
http://infopub.sgx.com/FileOpen/Announce...eID=548365

**If Co distributes the $16.9 mil from 20% Escrow Account, it will be $0.07 per share - think this may be from one of the past new releases, together with the $0.02 per share ?

So in terms of per share,
share price(est)  vs  |    confirmed get    |   subject to conditions(Escrow)    |        NAV after distribution^
$0.355                    |       $0.24            |        $0.07                                 |       $0.19(of which $0.083 is cash)        

^I think the left over CEM portion of the Co. is currently loss making.

Is my understanding right ?
PS : still reading and trying to piece the picture before mkt starts on Mon.

Point 1)
There is a $7M (roughly) expenses so the actual dividends to be returned to shareholders is $77M(net sale proceed) instead of $84.5M. And the issued number of shares has increased to 233M

Per share basis
*80% Payment Received : ($67,600,000 - 7,000,000)/233M = about $0.26
**20% Escrow : $16,900,000 / 233M = about  $0.07
Total gains per share = $0.26+$0.07 = $0.33 (Net sale proceed, company said will return ALL net sale proceed to shareholders)

Already Announced to be paid on 12 April is $0.155. Special dividend/capital reduction $0.085 details to be announced. The remaining $0.07 (Escrow) and the final $0.02 to be announced after the special dividend.  Total = $0.155 + 0.085 + 0.07 + 0.02  = $0.33. Note: $0.155 + 0.085 = $0.24 is the INITIAL payment as stated in the circular. So the $0.07 and $0.02 should be subsequent payments.


Point 2)
According to the company, with the semiconductor business sold, they can now focus all their energy to grow the remaining CEM business which has already shown results. The CEM revenue increased by 45% (if I remembered correctly). Refer to the following announcement.

[dreamybear]

Thanks TerryT and Supermonkey for your replies.

In the last para above, it was stated "Our financial position will be strengthened if this divestment is completed."

Is it because the continuing operations(CEM arm) is making less loss comparatively(i.e. -0.88 vs -1.77 shown below) ?
 
   


Hats off to dydx for spotting this Co much much earlier, unfortunately, I didn't have time and capacity(limited knowledge) to look into this Co in the past. Another multi-bagger in the bag for dydx; that's why I always maintained this valuable forum is a must-read, so many "avoid the limelight Crouching Tiger, Hidden Dragon"  !

For late comers like me, it can only be a special situation potential opportunity under current circumstances.

[Supermonkey]

Thanks TerryT and Supermonkey for your replies.

In the last para above, it was stated "Our financial position will be strengthened if this divestment is completed."

Is it because the continuing operations(CEM arm) is making less loss comparatively(i.e. -0.88 vs -1.77 shown below) ?
 



Hats off to dydx for spotting this Co much much earlier, unfortunately, I didn't have time and capacity(limited knowledge) to look into this Co in the past. Another multi-bagger in the bag for dydx; that's why I always maintained this valuable forum is a must-read, so many "avoid the limelight Crouching Tiger, Hidden Dragon"  !

For late comers like me, it can only be a special situation potential opportunity under current circumstances.

They managed to improve the revenue for the remaining CEM business  and now they are able to focus all their attention on CEM, there is a great chance of turning around. Imagine making CEM profitable , the company will be a profitable company, NTA around 13-15 cents which net cash of 8.3 cents which translate easily to share price of 15-20 cents depending on how profitable they become. 

So it means after receiving ur dividend of 33 cents potentially and if u loaded the counter at 35 cents, u are only paying 2 cents to have a counter which potentially may trade at 15-20 cents!!!

Even if the company cannot turnaround and keep making losses, the share price will still trade at above 8 cents becos of it's net cash of 8.3 cents. So u are only paying 2 cents to have a counter trading at above 8 cents.

[Supermonkey]

Today market STI crash 50 points, for MFG huge  block to sell at 36 cents. It may be some BBs putting a block at 36 cents to induce selling , especially when market is bad.

Think they are accumulating at 35.5 cents. Wait until market recovers and a few days before XD, share price will rise.

[dreamybear]

Thanks Supermonkey for your follow up explanation. 

I am just wondering whether is there anything that I missed out, i.e. I don't know what I do not know, because it seems to be quite a clear arbitrage opportunity at the current share price(save for unexpected huge losses or write down at its CEM arm moving fwd).

To whoever interested, there is a nextinsight article for the Co, but pls note that some parts of the article have already been covered by fellow valuebuddies.

----------------------------------------------------------------------------------------------
MFG INTEGRATION: Look out for dividend bonanza + undervalued biz
Published: 21 March 2019

Manufacturing Integration Technology is overlooked by investors.

It has 2 businesses -- semiconductor equipment business and contract equipment business (CEM). Its outstanding shares total 229M..... Basically, you are paying 2 cents for the CEM business and NTA of 15 cents......

Assuming the stock trading price is 12 cents, which is below the NTA of 15 cents, you will have a profit of 10+ cents per share based on an initial purchase price of 33 cents within 18-20 months.

And who knows, the company may even decide to return to shareholders the remaining 7 cents net cash too.

More details on https://nextinsight.net/story-archive-ma...valued-biz

[TerryT]

Beside the amount of cash management had annouced to return to share holders, this is not END game, moving forward


1) How do value a loss making business?

1) how the managers going to utilize the cash to improve shareholders' value?


There are quite a few net net counters, but market did not price them according to their 'value' on paper.

[Supermonkey]

Today I took profit at 36.5 cents... sad but i sold based on the following reasons:

Reason 1: As mentioned, the latest annoucement from MFG states that the issued shares will increase to 240.7M so it means lesser dividend per share and the reason for the increase in the number of shares is becos of the employee/related people exercise their options for the shares before it goes XD. This means they may begin to sell their shares since the share is trading at recent high right now. Some may not have the patience to wait for 1.5 years to get the total dividends and dun want to take the risk of waiting for CEM business to turnaround.

Reason 2:The latest annoucement states that the NTA of the company will be 10.14 cents (including the 1 cents from the sale proceed)  which means  post distribution of dividends, the NTA will be only around 9 cents. This is much lesser than the NTA of 15.6 cents that I  read from the previous financial statement.  So it means there is less " meat" left.

Reason 3: The selling and the sell queue is quite relentless today as today is the last weekday of Q1 (march 2019). Wondering if anyone got hint that the revenue does not hit the required $46M which means the 3.5 cents dividend from the Escrow account may not materialised.??? (half of $16.9M translate to 3.5 cents per share to be returned to buyer in this case), thats why strong selling started from around 11am...

Anyway all the best to the rest of you who are still holding on ... just want to provide my opinon and hope it helps. Cheers.


The market depth shows huge sellers while buyers start disappearing.

[Dosser]

Profit warning for 1H 2020:

https://links.sgx.com/FileOpen/PROFIT_GU...eID=626217

Not just profit warning, but warning of net loss.