Tuesday, 10 January 2017

Potential Munchies - A little known company?

Hi everyone, hope the New Year has been treating you all well thus far! I was bored today so I did random searches on SGX-Listed Catalist companies. 

The reason why I am interested in smaller-cap (for those of you who dont know, this is a common abbreviation for "companies with smaller market capitalisation" is due to their greater potential for growth. (I've spoken briefly about this in my earlier posts) Long story short, smaller companies are more likely to be able to grow and increase their market share as compared to larger companies, due to reasons such as product saturation.

So I found a pretty interesting company/group: 

Keong Hong Holdings (5TT.SI)

(image source: keonghong.com)

Well technically this group is not a Catalist group, it is: founded in 1983, listed in 2011 on the catalist, but transitioned to mainboard in 2015.

This group basically does construction and building, has a P/B of 0.79 which is really good value, basically you will be paying less for the company's assets than the market valuation, and this is still decent when comparing to other companies in the same sector.

It also sports a dividend yield of 7.49% (however the dividends have not been very consistent). Upon a closer look however, its' lowest dividend historically would have been in 2015, where it had total dividends of $0.018, which based on today's share price of $0.465, would be equivalent to a 3.87% yield, which is still decent. They're dividend payout ratio also sits at only 23.1%, which would give them ample financial headroom.

If you take a look at its share price; it has actually been growing at a decently fast rate since its listing, when compared to the STI ETF (ES3). Although history doesn't determine the future, it does show that this group, or the markets' expectations of this group have been growing:

(image credits: yahoo finance)

Ok moving on, the group appears to have a decent pipeline of projects in place. The construction order book currently stands at $351M, which allows for a sustainable flow of activities up till the end of FY2018. It is also in charge of a number of notable projects including the Raffles hospital extension, it also has several overseas projects, including the expansion of the Kooddoo domestic airport (Maldives), and the construction of the Pullman Maldives Maamutaa Resort in the Maldives, the group it also has investments in Japan. 

Although due to property cooling measures and oversupply (IMO) of new private housing projects would be very challenging, I believe that the group is going in the right direction by expanding overseas. 

The group has set its sights on the tourism industry in Malaysia, Japan, Indonesia and Australia and is planning to grow its contributions from hotel development and investments, which is probably a good step forward as it is currently highly reliant on the Singapore private property market for its' revenue source. 

Therefore, I will certainly be putting this company on my watchlist for now and will be monitoring its' future developments.

That's all from me for today!

Best Regards, 

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