Just sold off a couple of days ago at 1.09, itchy fingers again. Seriously this company has good growth in revenue and earnings, good cash flow from operations, excellent management, Sterling operating performance, low solvency risk; and yet trading at undemanding valuation. What else do you want? Yeah I know i know, nobody goreng one! Yeah I know i know, no analyst reports. Yeah i know i know, the management not telling you they are going to have this and that corporate exercise, going to grow by 25%, 30%, 50% etc.
Oh, passerby, I was talking about the underlying share, not the warrants.
For the warrant, at 21 sen, it is trading at a premium of 36% and an implied volatility of 25%. I have taken into consideration of its dividend yield of 4.8%. My opinion is the warrant is fully valued. A good punt if you are bullish about Freight as the gearing is 5.3 times.
Oh yeah man, passerby. Thanks for pointing out. Freight has no liquidity. That makes it a rotten lemon. But I can't understand your concern about freight of this "poor liquidity" as I have tabulated your return, short-term as well as long-term as below.
Those returns exclude dividends, and also your free warrants you get last year. Can you tell me why are you so disgruntled about this "no liquidity" of Freight? Are you so greedy one?
At the price of Freight now at 1.29 and warrant at 30.5 sen, the warrant is trading at a small discount of about 1%. That may be why somebody sent for conversion just to get that small gain. But this is an unwise decision as the warrant has 4 more years before expiry and there is some good time value there. Unless of course if there is a big dividend pending.
Posted by kcchongnz > Jan 29, 2013 09:22 PM | Report Abuse X
Freight's 2012 ROE of 16.35% is good (>15%). The profit margin of Freight of 6.4% is slightly lower than Tasco and Century. But its way of doing business requires less assets as its basic earnings power (ebit/total assets)is much higher at 15% compared to those of Tasco and Century which is about 9.3%. It has higher asset turnover of 1.5 too and a good use of its financial leverage at 1.74 which both boost up its ROE. D/E ratio of 0.23 is still manageable with ebit of 18 times interest payment.
Using a discount cash flows analysis of owners' earnings, and included the deduction of the value of its warrants estimated by Black-Scholes Option Pricing Model, the intrinsic value of Freight is RM1.62. The followings are data and assumptions:
Current revenue: 327m Net income 2012: 20.9m Growth for next 5 years 8%, and 3% subsequently Required return: 10%, ie 6% risk premium over MGS long-term rate of 4%
Hence at RM1.00 at today's close, the margin of safety is 38%, larger than my requirement of 30%. Good buy.
Type Announcement Subject PUBLIC SHAREHOLDINGS SPREAD Description FREIGHT MANAGEMENT HOLDINGS BHD - NOTIFICATION OF NON-COMPLIANCE WITH PUBLIC SHAREHOLDINGS SPREAD REQUIREMENT PURSUANT TO PARAGRAPH 8.02(1) OF THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD
The Board of Directors of Freight Management Holdings Bhd (“FMHB” or “the Company”) wishes to inform that the Company is not in compliance with the public shareholdings spread requirement pursuant to paragraph 8.02(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) (“Public Shareholdings Spread Requirement”). Based on the Record of Depositors as at 28 June 2013, the public shareholdings spread is 22.27% i.e. a shortfall of 2.73% from the minimum requirement.
As at the date of this announcement, the Company has yet to formulate any rectification plan but will explore various options available to increase 2.73% of its public shareholdings spread. The Company will meanwhile promote its shares to its employees by encouraging the employees (including Senior Management Staff) to purchase Company’s shares from the open market and to hold these shares for long term investment purposes.
The Company also encourages potential investors and other stakeholders to invest in the shares of the Company via periodic investors relation activities and analyst briefings.
FMHB will apply to Bursa Malaysia for an extension of 6 months to rectify the shortfall in the public shareholding spread.
Shouldn't be surprise, saw some huge warrants conversions. If the big boys convert their warrants, their holdings would have increased as others have yet to convert
I was wrong on Freight Wa when I used Black-Scholes Option Pricing to value it.
Posted by kcchongnz > Mar 12, 2013 04:14 AM | Report Abuse X Oh, passerby, I was talking about the underlying share, not the warrants. For the warrant, at 21 sen, it is trading at a premium of 36% and an implied volatility of 25%. I have taken into consideration of its dividend yield of 4.8%. My opinion is the warrant is fully valued. A good punt if you are bullish about Freight as the gearing is 5.3 times. May be I should buy the warrant instead.
Warrant price depend very much on the underlying company's future prospect, not merely its share price according to the BS OPM, nor the liquidity or non-liquidity of its underlying shares. As the company business gets better, its share price increases in tandem, and the warrant price increases by a much higher rate in accordance to its gearing.
Freight warrant is trading at a 7.4% discount now at 54 sen when the underlying share price is 1.63, with a gearing of 3 times. This appears to me to be a very low risk investment, with good potential of upside.
This is because Freight has been doing well in very steady manner year-on-year in term of growth in revenue and profit. I first got to know about this company through a forumer here named luzeeker. He has written some very good articles about Freight in his blog. Hope he can update us his view on Freight.
Freight Management has been reporting a profit every year since it was listed.
It is one of the best managed logistic companies in the Asean region. It has this asset light model, initially pointed out by investment guru Mr KC Chong.
New IPO: The onshore and offshore support services provider for the O&G industry, Steel Hawk Bhd aims to list on the Ace Market!
MQ Trader 5911 views | 5 d ago
0:17
New IPO: The largest mini-market player and a leading groceries retailer in Malaysia, 99 Speed Mart Retail Holdings Bhd aims to list on the Main Market!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
passerby
2,877 posts
Posted by passerby > 2013-03-11 19:51 | Report Abuse
kchongnz: you are holding any of this ?