Pan-Asia Equity Bottom-up, Wickhams Hill

Lloyd Moffatt

Pan-Asia Equity Bottom-up

Research-Intensive Fundamental Value Advisor

Wickhams Hill

Wickhams Hill Capital is a research-intensive fundamental value advisor, on long and occasionally short investment opportunities concentrated in small and mid-cap public companies.

Equity Bottom-Up

Steel Pipe Industry of Indonesia / Equity Bottom-Up

PT Steel Pipe Industry Of Indonesia Tbk manufactures steel pipes. The Company produces ERW pipes, spiral welded pipes, stainless steel welded pipes, electric poles, lighting poles, scaffolding and other related products.

Steel Pipe Industry of Indonesia (ISSP IJ)

<ul><li>Indonesia’s leading steel pipe company PT SPINDO published FY21 results earlier this week, crystallizing a year of record profitability with EBITDA doubling and NPAT increasing 2.8x.</li><li>The heightened profitability is attributable to a combination of high steel prices making room for wider margins (in both percentage and absolute terms) combined with an improving product mix and unwavering demand landscape.</li><li>We note that EPS of just IDR 5.6 in 4Q21 was well below the 9M21 run rate of IDR 62.0 and was due to several unexpected one-time expenses and provisioning for a possible tax expense</li></ul>

Indonesia’s leading steel pipe company PT SPINDO published FY21 results earlier this week, crystallizing a year of record profitability with EBITDA doubling and NPAT increasing 2.8x.The heightened profitability is attributable to a combination of high steel prices making room for wider margins (in both percentage and absolute terms) combined with an improving product mix and unwavering demand landscape.We note that EPS of just IDR 5.6 in 4Q21 was well below the 9M21 run rate of IDR 62.0 and was due to several unexpected one-time expenses and provisioning for a possible tax expense

PT Steel Pipe Industry of Indonesia Tbk (SPINDO): Breakout Year In The Bag

Procurri Corporation Limited provides enterprise data center equipment and lifecycle services to clients in Singapore and internationally. It offers IT distribution services, including hardware resale and supply chain management; and lifecycle services, such as independent maintenance, Hardware-as-a-Service, and IT asset disposition.

On Friday, 7th Sept, <a href="https://www.smartkarma.com/entities/24110" target="_blank" data-smartkarma-citation="entities:24110:1">Procurri Corporation (PROC SP)</a> announced that they had received an <a href="http://infopub.sgx.com/FileOpen/Procurri%20Announcement_20180907.ashx?App=Announcement&amp;FileID=524444" target="_blank">unsolicited non-binding indication of interest in the company’s shares</a>.
We noted in our initial <a href="https://www.smartkarma.com/insights/deep-dive-procurri-corporation-darkest-before-dawn-180-upside" target="_blank">Deep Dive</a> report that there is an active market for companies like Procurri, with their largest competitors owned by private equity giants Carlyle and Partners Group, so the company being a target was a real possibility.
Our analysis of comparable transactions in the sector, in addition to management’s guidance, is that the company’s fair value is around 8-10x EV/EBITDA. At the low-end of that range, Procurri would be worth 0.54c, implying 80% upside to the current share price.

On Friday, 7th Sept, Procurri Corporation (PROC SP) announced that they had received an unsolicited non-binding indication of interest in the company’s shares.
We noted in our initial Deep Dive report that there is an active market for companies like Procurri, with their largest competitors owned by private equity giants Carlyle and Partners Group, so the company being a target was a real possibility.
Our analysis of comparable transactions in the sector, in addition to management’s guidance, is that the company’s fair value is around 8-10x EV/EBITDA. At the low-end of that range, Procurri would be worth 0.54c, implying 80% upside to the current share price.

Procurri (PROC SP): What Would Be a Fair Price for Minority Shareholders?

Thematic (Sector/Industry)

A collapse in our Singapore small-cap index, which was up almost 15% YTD in Mar and has subsequently fallen more than 17%, has prompted us to look for situations where company valuations may have become irrationally cheap.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/061/595/original/1.png?1535094246" class="editor-image img-responsive" data-smartkarma-image-id="61595"></figure>
<div class="content-caption">Figure 1 - Our Singapore small-cap index was up almost 15% YTD in Mar and has subsequently fallen more than 17%</div>
A simple screen we ran ranks companies in our Singapore index by Net Cash as a % of Market Cap. Investors would know these companies are often cheap for a reason…

A collapse in our Singapore small-cap index, which was up almost 15% YTD in Mar and has subsequently fallen more than 17%, has prompted us to look for situations where company valuations may have become irrationally cheap.

Figure 1 - Our Singapore small-cap index was up almost 15% YTD in Mar and has subsequently fallen more than 17%
A simple screen we ran ranks companies in our Singapore index by Net Cash as a % of Market Cap. Investors would know these companies are often cheap for a reason…

MacroAsia Corporation, through its subsidiaries, engages in the aviation-support businesses in the Philippines. The company operates through In-Flight and Other Catering, Ground Handling and Aviation, Charter Flights, Rental and Administrative, and Mining segments. It provides aircraft maintenance, repair, and overhaul services; in-flight catering services; ground handling services for passenger and cargo aircraft; and helicopter charter flight services, as well as operates the special economic zone at the Ninoy Aquino International Airport. The company also provides catering services for institutional clients; and acquires, develops, and sells real properties. In addition, it is also involved in the provision of consultancy and mining exploration services focusing on nickel areas. Further, it holds interests in Infanta Nickel project covering an area of approximately 1,114 hectares located in Brooke�s Point, Palawan. The company was formerly known as Cobertson Holdings Corporation and changed its name to MacroAsia Corporation in November 1995. MacroAsia Corporation was incorporated in 1970 and is based in Makati City, the Philippines.

<ul>
<li>
Although associate income from LTP was flat YoY for the half, we are encouraged by increased utilisation of existing hanger assets, moving from 1.5 to 2 shifts/day, and the transition toward Line Maintenance which at 60% of revenue drove core EBIT margins to 28%, up 3% QoQ.
</li>
<li>
Though currently only a small contributor to operating profits, ground handling (MASCORP) and airline catering businesses (MACS) have continued to post strong operating results and revenue growth. We see that FY18-19 is a…
</li>
</ul>



Although associate income from LTP was flat YoY for the half, we are encouraged by increased utilisation of existing hanger assets, moving from 1.5 to 2 shifts/day, and the transition toward Line Maintenance which at 60% of revenue drove core EBIT margins to 28%, up 3% QoQ.


Though currently only a small contributor to operating profits, ground handling (MASCORP) and airline catering businesses (MACS) have continued to post strong operating results and revenue growth. We see that FY18-19 is a…



MacroAsia - Some Green Shoots Amongst the Complex 2Q18 Results

Future Bright Holdings / Equity Bottom-Up

Future Bright Holdings Limited is an investment holding company.  The Group, comprising the Company and its subsidiaries, is engaged in the sales of food and beverage and property investment. Future Bright sells food and beverage in Macau and Mainland China and is engaged in the leasing of property.

In May we published a Deep Dive (<a href="https://www.smartkarma.com/insights/gambling-on-a-bright-future-initiating-coverage" target="_blank" data-smartkarma-citation="insights:20774">Gambling on a Bright Future</a>) on Hong Kong listed Macau restaurant company, <a href="https://www.smartkarma.com/entities/14321" target="_blank" data-smartkarma-citation="entities:14321:1">Future Bright Holdings (703 HK)</a>. Our thesis hinged on a turnaround in the restaurant business in conjunction with the sale of a large piece of land in Hengqin and tenanting of a prime property adjacent to St Paul's ruins in the tourism centre of Macau.
Since then, the company purports to have made progress with the land sale and finding a tenant for the St Pauls property. A note in the…

In May we published a Deep Dive (Gambling on a Bright Future) on Hong Kong listed Macau restaurant company, Future Bright Holdings (703 HK). Our thesis hinged on a turnaround in the restaurant business in conjunction with the sale of a large piece of land in Hengqin and tenanting of a prime property adjacent to St Paul's ruins in the tourism centre of Macau.
Since then, the company purports to have made progress with the land sale and finding a tenant for the St Pauls property. A note in the…

FutureBright's 2Q18 Results Reaffirm Our 140% Target Return over 6-18 Months