Sunday, April 03, 2011

Nerves of Steel

Asia Enterprise Holdings (AEH) continued to perform credibly in FY2010. The group registered EPS of 3.52 cents, extending its track record of profitability to 38 straight years.

With over 50% of its inventory gearing towards supplying the shipping industry, AEH is likely to benefit from the boom in the marine and offshore sector in 2011. In fact, the Group reiterated its bullishness by indicating that the Group "stands to benefit from rising steel prices".

AEH continues to maintain a strong balance sheet with 38% of its NAV being a net cash position of 14 cents.

Valuations wise, the Group remains compelling. At the market price of 34 cents, it trades at a 14% discount to its NAV of 38 cents. On a PER basis, it trades at 9.6x earnings. Excluding its cash horde, the PER dips to only 5.4%.

Hence, valuations does not look overstretched even though it has run up over 20% from our call on 21 December 2010 (when stock was trading at S$0.27 per share).

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1 Comments:

Blogger Drizzt said...

hi Mr Market. sad to say i didn't take your hint. A rather outstanding business that if you understand the risk involved you can watch yourself quite safely.

Pay pretty low yield but they are retaining alot of cash. We know that in 10 years there are years you are expecting that you do not make much. There are bad years.

Judging by an EV/EBITDA of 4 times we just need 4 similar years to fully earn back what we put in. that is around 8 mil in retain earnings will inject 32 mil into the balance sheet.

What are they going to do with so much cash?

Drizzt
Investment Moats.com

2:08 PM  

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