The following is adapted from Joseph Yeo's post on 8 Dec 16 in the NextInsight forum. Since then, the share price has risen 29.7% from 11.8 cents to 15.3 cents.
I find this company interesting, under-valued and neglected ... generally, outside the radar of most investors.
Below are interesting data about the company:
|ABOUT SINOSTAR PEC
♦ One of the largest producers and suppliers of downstream petrochemical products within the 400km radius of its production facilities within the Dongming Petrochem Industrial Zone in Dongming County of Shandong Province, PRC.
♦ Located within the Zhongyuan Oilfield - one of the PRC’s largest oil fields, rich in energy resources and connected by a comprehensive logistics network.
Its strategic placement permits it to serve the nearby populous and industrialised provinces such as Shandong, Henan, Anhui, Shaanxi, Hebei, Hubei and Zhejiang.
1. zero debt
2. cash horde of S$95 mil
3. market cap at S$76 mil based on current price of 11.8 cts
4. profitable in the last 9 quarters.
5. last financial year (2015) profit was S$8.1 mil
6. current year (2016) 9-month profit is S$14.3 mil. This is 76.5% higher than the whole of last year.
7. NTA is 18.6 cts
8. PE (price earning ratio) for 9 mths is 5.3. If current profit trend continues, the forward p/e would be less than 4
9. Cash backing per share is 15.5 cts.
|Yes, there is a stigma on S-chips, but from my many years of investing, I have noted that most scandalous S-chips were hot stocks before the scandals surfaced and normally within 5 years of listing. Sinopec was never a hot stock and have been listed since 2007 ... 10 years. So I am quite comfortable with it.
The major shareholder had bought back shares in the open market on 4 occasions this month. At current price it is still trading below its cash value of 15.5 cts per share. Company has no debt. Its profit for 9 mths current is S$14.3 mil. This implies a forward p/e of less than 4. To me, it's still undervalued.
-- Joseph Yeo
10. Dividend of 0.5 cts per share
11. Dividend yield is above 4%
12. Recently major shareholder (non-executive chairman) has been buying shares in the open market.
My view: This company is grossly under-valued. It's trading below its cash level, it has a dividend yield of above 4%.
Major shareholder buying back shares, trading below NTA, profitable in the last 4 quarters, no debt, management confident of ability to maintain outperformance.
Above for sharing only, not an encouragement to buy or sell. I am heavily vested.