Posted by houseofordos > Apr 10, 2013 12:32 AM

Here is another counter that might meet the 5 yardsticks and possibly undervalued:- 

Willowglen MSC Berhad is engaged in the research, development and supply of computer-based control systems. Its supervisory control and data acquisition (SCADA) system is used in security monitoring, building management and environmental control systems. During the year ended December 31, 2009, the Company delivered a hardware expansion board for the remote terminal unit (RTU) 6500 series, developed an internal hardware test system to further ensure manufacturing quality and released the SysLink version 3.8.2. SysLink 3.8.2 was developed to incorporate features, including openness, productivity and connectivity (OPC) client, support for more relational database servers and a new industrial standard protocol. Its operations are carried out in Malaysia, Singapore, Europe and other countries. As of December 31, 2009, the Company's subsidiaries were Willowglen (Malaysia) Sdn. Bhd., GB Tech Sdn. Bhd., Willowglen Services Pte. Ltd. and Willowglen (Hong Kong) Pte. Limited. 


1) ROE (Consistently >15% except for 2011) 

2) Free cash flow - Healthy, low capex and consistently positive. The FCF is low for 2012 due to high amount of receivables from contract customers. 

Cash Flow

3) PER 
Based on EPS(TTM) FY2012 of 6.32 sen and closing price of 42sen, it is trading at P/E of 6.6 which is undemanding. 

4) Dividend yield 

Dividend yield for 2012 at closing price of 42 sen is at 7.1% which is great. It's strong cash position enables a high dividend but even then the earnings have been able to sustain the dividend payouts as there is minimum investment on capex. It is a net cash company with no debts. Cash/share = 12.6sen 

5) NTA 
The net assets per share is RM0.3. This implies a Price/NTA = 1.4 which is OK since this company is a service based company which is asset light. 

6) Growth 

The growth has been not been consistent over the past 5 years possibly due to high percentage of profit derived from contract customes. 

This counter may not fit in as a growth stock for now but it is a financially sound company and even as a no growth stock offers a decend dividend yield which is supported by strong cash flow. Comments ??

Extra Notes from kcchongnz

Posted by kcchongnz > Apr 10, 2013 07:46 AM 

house, well done. A few points here. A service based company's main asset is intangible, such as human resources, reputation etc. Hence book value is low as rightly pointed by you. Its ROE should also be high, which at I am surprised its ROE is just 21%. Maybe to much cash. A better metric may be is ROIC. CFFO for last two years are very low according to your tabulations. Occasional low CFFO and FCF is alright, more important is the trend and average. This is because sometimes due to lumpy payment of contract works and hence sometimes of high receivables. I would like to check further why such a low CFFO. Any inappropriate realization of future profits which costs have not been incurred? For growth, the future expected growth is important. Willow seems to be getting a lot of contracts recently which is good for future growth. 

Overall Willow meets about half of the criteria. But that doesn't mean Willow has no great future. I would think the future is good based on its recent jobs secured.