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 (SPINDO) is Indonesia's largest steel pipe manufacturer, producing a diverse range of steel pipes, tubes, and related products. Their offerings include carbon steel and stainless steel pipes used across various sectors like construction, infrastructure, oil and gas, automotive, and furniture. The company also provides services such as galvanizing, shearing, and slitting. Headquartered in Surabaya, Indonesia, the company was established in 1971.

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 is a global independent provider of IT lifecycle services and data center equipment. The company offers hardware resale, independent maintenance services, and IT asset disposition (ITAD), including data destruction and e-waste recycling. Procurri's global headquarters are located in Singapore, and it was incorporated in 2013.

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 is a leading provider of aviation-related support services in the Philippines, encompassing aircraft maintenance, repair and overhaul (MRO), in-flight and institutional catering, and ground handling. The company also has ventures in property development, water treatment and distribution, and mining. MacroAsia Corporation was founded in 1970 and is headquartered in Makati City, 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 Limited is an investment holding company primarily engaged in the operation of restaurants, catering, and food souvenir businesses. The company offers a diverse range of cuisines, including Japanese, Chinese, Western, Portuguese, and Macanese, alongside food court counters, institutional catering, and food trading. It also engages in property investment and laundry services. Future Bright Holdings Limited was founded in 1984 and is headquartered in Central, Hong Kong.

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