Showing posts with label Analab. Show all posts
Showing posts with label Analab. Show all posts

Thursday 30 August 2012

Analabs - Return on Retained Earnings

Analabs
Year DPS EPS Retained EPS
2002 2.7 16 13.3
2003 1 2.9 1.9
2004 1 5.5 4.5
2005 0 7.2 7.2
2006 1.3 4.5 3.2
2007 2 10.9 8.9
2008 3.3 16.1 12.8
2009 3.4 16.6 13.2
2010 3.8 25.3 21.5
2011 3.8 29.1 25.3
2012
Total 22.3 134.1 111.8
From 2002 to 2011
EPS increase (sen) 13.1
DPO 17%
Return on retained earnings  12%
(Figures are in sens)

Thursday 3 September 2009

Analab

3.9.09

NAV 1.94
No of Shares 60.02 m
Equity 115.1 m
Cash and Cash Equivalent 32.27 m ( 0.538/share)
Investment in Equity 15.83 m (0.263/share)
Earnings (after tax) 9.37 m (0.156/share)
Dividend 0.045/share (gross)
ROE 8.13%

Today's share price 1.02/share
DY 4.4% (gross) 3.1% (net)
PE 6.53
Market cap 61.22 m

Last 5 years (2005 - 2009)
Total EPS 0.571
Dividend 0.1205
DPO 21%


So many questions to ask of the management?

1. Why is the management of this company hoarding so much cash?

2. Will this cash be employed more productively in the future?

3. Why is the management investing 15.83m into equity?

4. Why not return the surplus cash to the shareholders?

5. Why is the company paying such miserable dividends when it can well afford to be more generous? A reasonable company should pay around 30 to 70% of earnings as dividend.

6. The present ROE of 8.13% isn't great and does not lend support to the management retaining so much earnings each year.

7. Why is the management not taking heed of the investors of this stock?


This is a company with reasonable business revenues and earnings. However, the management has erred in its role as the steward of the company on behalf of the shareholders. The minority shareholders are not adequately rewarded. The return is not decent enough, therefore its share price is trading at a huge discount to its NAV.

A value investor maybe tempted to buy this stock. Moreover, it gives a dividend yield of 3% and if one can wait (BIG IF) for the value of the shares to realise its fair value, that's fine.

The risk is that this company will continues to be managed thus, giving miserable dividends, and hoarding cash which are employed at a low ROE for many years until one fine day, the majority shareholders decide the market price should be higher. Without being able to persuade or influence these important decisions, should you put your money into this stock?