This counter is especially interesting.
I am still waiting for their news on the IPO listing of Kaset Thai International Sugar (KTIS). King Wan have not make a official announcement regarding the IPO yet.
The latest news I seen is the link here - 4th April
http://www.bangkokpost.com/business/news/403301/ktis-to-build-more-plants-with-ipo-cash
I'm not too sure how much this source can be trusted. When this source was published on the 4th April, King Wan price shot through and break the downtrend resistance. It hit a high of 0.315 and closed at 0.300. The last closing price on 17th April 2014 is 0.320.
From the source " Its debut on the Stock Exchange of Thailand has been slated for April 28"I do hope it is true. I'm eager for any official news that KingWan can provide soon. Hopefully, this will unlock further potential that I'm looking forward to. The IPO has been delayed for months and the only latest news KingWan announced was on 17th Feb 2014 regarding the Approval for KTIS to list their IPO by 15th August 2014 (Link provided).
EDITED : * KTIS to list their IPO on 28th April 2014 * 10 Baht/share
(Credits to MISSLEE1137, Thank you very much)
How does KTIS listing affects KingWan Corp Ltd?
Reason being: King Wan sold their entire holdings in Environment Pulp and Paper Company (EPPCO) to KTIS through the proceed of 5% cash and the remainder through the listing of KTIS Shares ($50m worth). It doesn't really matter if the IPO price is high or low. If it is priced low, they will be compensated with more shares. So, once KTIS IPO is listed, KingWan will receive their shares which I guess most investors are waiting for this moment. KingWan can either choose to liquidate all of their shares or keep part of it. Liquidation of KTIS shares will probably mean more upside to dividend. Hehehe! Investors can expect special dividends to be coming in :)
Current dividend yield (Using 1.5cents)
= 0.015 / 0.320
= 4.6875%
A predicted special dividend of 1.5 cents will translate to a dividend yield of 9.375%. Yum Yum!
A Quick Calculation On Financial Ratio
- Net Asset Value = (84,870,159 / 349,176,870) = 0.243
- P/E Ratio = 14.74
- Current Ratio = (59,497,059 / 40,742,999) = 1.46
- Debt to Equity = 8.99%
Things to take note
Loans made to associates : S$23m bears interest at 2.5% to 5% per annum, S$26m interest free (Keeping an eye on this)
This S$54m loan out is very substantial because the group revenue for 3Q2014FY was S$25m. (The loan is twice as much as what they gain in revenue)
A Quick Business Summary of King Wan Corporation Limited
King Wan Corp Ltd started off as a construction firm. Now it operates in 4 different segments. Investing in this stock is some what a diversification already.
1. Mechanical and Electrical (M&E) engineering services for construction and building industry. (Core Business) Eg. Installation distribution, alarm system, air-conditioning, fire protection, M&E design, mechanical ventilation system for buildings. Up to today, they secured a total worth of S$166m M&E contracts till 2017.
2. Services (Provides rental for mobile chemical lavatories) So far I have not seen a mobile toilet by them yet.
3. Property (Engages in the development, marketing and sale of residential and commercial properties in SG, China and Thailand)
4. Vessel ownership and Chartering (Chartering of vessels to third parties)
(Vested)
Disclaimer: This is not a buy or sell call. Please exercise your own due diligence before making any decision. I will not hold responsible for any gains/losses you make.
Cheers!
Little Boy
More sources can be found at the links below.
OSK-DMG Brokerage Report on 8th April 2014
http://www.remisiers.org/cms_images/research/Apr7-Apr11_2014/0408_OSK_Morning_Matters.pdf
OSK-DMG Brokerage Report on 16 August 2013
https://research.osk188.com/attachments/36/osk-report-sg-king-wan_1qfy14-good-things-are-worth-the-wait_20130816-xjiE202892333052116608cfba0.pdf
Hi,
ReplyDeleteI would say that the news is pretty reliable given the source. Bangkok Post is one of Thailand's oldest newspapers, something like our ST. Holding onto Kingwan since the early days when it was trading at 19.5c, would say that it is definitely a fundamentally sound stock and given their relationship with KTIS, the listing is only a matter of time. The only key issue is opportunity cost.
Hi SGValueInvestor,
DeleteI just read your blog. Great insights and detailed analysis you covered. I will add your blog on my blogroll :)
Okay, seems like the source is reliable. Another week more and KTIS will list their IPO, but KingWan have not make any official announcement. Are they hiding anything?
Anw, What do you think about the loan to associates which I mention? Do you think it will be a problem? *Especially S$26m interest free* It is a very substantial amount.
IPO is confirmed at 10Baht/share.
Deletehttp://www.set.or.th/en/company/ipo/upcoming_ipo_set.html
good luck to all vested
Hi MSLEE1137,
DeleteThank you very much for sharing!
Yup, it is confirm listed then. Happy for the good news :)
The significant loans to associates are worth keeping tabs on, also because the associates' results are under water. This affects the KingWan's ability to recover the loans.
ReplyDeleteInterest free loans can be red flags as they don't reflect arms' length transaction, unless there are in kind elements which are not disclosed in their annual report. Keep fingers crossed that the auditors are doing a good job.
Good write up!
Hi Henry,
DeleteThank you for your views regarding the loans to associates.
I guess we really have to keep a look out on the loans to associates. It's really not a small amount to miss out on. You will never know when the associates are not able to pay KW back. If so, this huge amount as bad debts will definitely be an eye sore.
Thank you for the compliment :)
Sometimes I feel that with regards to certain issues, we have to just trust the management that they know what they are doing. Given the management's past record and through talking to analyst who had past interactions with management, I have not seen any reason to doubt the management.
DeleteAlso, you could try bringing this query up via the IR. From past experience, their CFO has always been very forward and willing to help resolve your doubts :)