Sleeping Stock At Set

[Edonista]

Here's one that's been sleeping near all time low for long time...time for wake up ?

download.pdf

Edited November 6, 2007 by Edonista

[LaoPo]

Difficult to tell. Depends if they sell the shrimp to Japan and other countries in US$'s or Baht...

I also wonder why the price jumped to Bht 300/kg in November 2005; any idea ?

LaoPo

[sonicdragon]

Difficult to tell. Depends if they sell the shrimp to Japan and other countries in US$'s or Baht...

I also wonder why the price jumped to Bht 300/kg in November 2005; any idea ?

LaoPo

I suspect they would sell to Japan in either Yen or Baht, not USD

Anyway, I'm very skeptical of P/BV valuations. I would be looking at CFO/EV as a primary valuation metric. Can someone post the numbers or a link to the FS ? I hardly ever look at thai stocks but I'm curious about this one.

[Edonista]

Here is their 2006 Annual Report. Interesting to note they have almost no liabilities, that's why their dividend policy is a 100% payout.

CFRESH_2006.pdf

[Edonista]

Here's the latest FS available (2007 2nd quarter)

CFRESHE2.xls

[sonicdragon]

I think I understand why it trades at a low multiple. Profit margin is quite low (cash flow basis) so the earnings should be quite exposed to currency fluctuations, and event risk such as trade tariffs. Divident policy could easily be changed if management decides they fancy some new investment/direction, and with 70% of shares held by the family minority shareholders could (as usual) not come out of it well.

[tingtong]

I have it.

my reasoning was the botoming shrimp price a few weeks back, since the shrimp price rising.

it didnt hit stop so far, so, keep holding. my initial risk is quete low, i think this is a good entry price for that matter.

the volume is rising recently.

anyway, i am not an expert, and my number of shares arent high.

[Abrak]

I think the real problem with this stock is its earnings - stocks in the agri business sector have tended to traded on single digit earnings. P/BV is low but so is its ROE. The Div yield is high but as its pay out ratio is 100% - any fall in earnings will result in a fall in yield.

The big question is whether current prawn prices reflect the fact that other emerging prawn markets - such as India and Indonesia - are making it difficult for Thailand to compete or whether it is just a cyclical downturn (I have no idea). It is possible though, that prawns are one of Thailands sunset industries and that ROEs are not going to return to decent levels in which case, this stocks share price is unlikely to get back to previous levels.

(As a side note - you should check this company's accounting policies - I have found in the past that low ROE is often a reflection of under depreciation of underlying assets (and thus overstatement of book) rather than underlying fundamentals.)

[LaoPo]

I think I understand why it trades at a low multiple. Profit margin is quite low (cash flow basis) so the earnings should be quite exposed to currency fluctuations, and event risk such as trade tariffs. Divident policy could easily be changed if management decides they fancy some new investment/direction, and with 70% of shares held by the family minority shareholders could (as usual) not come out of it well.

Indeed, not an interesting investment. Co. is too small and, as you said, majority of shares is held by a single family. Also they probably sell in US$ as they hold assets in cash US$'s in 2006.

Trading in this stock will also be quite low and thus hard to sell if you are in need of cash.

I wouldn't invest.

LaoPo

[sonicdragon]

I think the real problem with this stock is its earnings - stocks in the agri business sector have tended to traded on single digit earnings. P/BV is low but so is its ROE. The Div yield is high but as its pay out ratio is 100% - any fall in earnings will result in a fall in yield.

The big question is whether current prawn prices reflect the fact that other emerging prawn markets - such as India and Indonesia - are making it difficult for Thailand to compete or whether it is just a cyclical downturn (I have no idea). It is possible though, that prawns are one of Thailands sunset industries and that ROEs are not going to return to decent levels in which case, this stocks share price is unlikely to get back to previous levels.

(As a side note - you should check this company's accounting policies - I have found in the past that low ROE is often a reflection of under depreciation of underlying assets (and thus overstatement of book) rather than underlying fundamentals.)

Personally I hardly pay any attention to historical cost earnings and depreciation. I focus mostly on cash flow. For the same reason I don't like ROE much either. Still, we seem to have reached the same concluson