Nam Cheong *Official* (SGX:N4E)

[Shahmatt]

Nam Cheong: New business contract with price negotiated in USD

I've been looking at Nam Cheong, and a couple of other counters where long term contracts (<5 years) are negotiated in terms of USD.

The NC letter of intent is here:
http://info.sgx.com/webcoranncatth....and_New_Contract_Final_200612.pdf?openelement

In the hypothetical situation that the value of the USD were to fall then the supplier company may be at a disadvantage as the income may not match rising prices.

Do we know by what methods companies can counter such falls in currency? Does the linked LOI suggest any means by which changing currency exchange rates can be managed?

 

[Mecisteus]

i believe every company must have adopted some form of hedging for managing its FX risk. 1 best way is to take a USD loan to do a hedge. so you may want to find out the hedging tools that the company are using. its a disasterous company if they dont have any such risk management practices.

 

[addict951]

Say no to pennies

 

[Careful Investor]

Companies with substantial foreign currency transactions should do some sort of hedging to minimize their forex exposure. Check their annual reports - there should be a note on how they manage their forex risks.

 

[Shahmatt]

Companies with substantial foreign currency transactions should do some sort of hedging to minimize their forex exposure. Check their annual reports - there should be a note on how they manage their forex risks.

Thanks. I'll take a look.

 

[Paul Lee]

Specifically, pg 121 of Nam Cheong 2011 Annual report will give you the answer that you are looking for.

The Group monitors its foreign currency exchange risks closely and maintains funds in various currencies to minimise currency exposure due to timing differences between sales and purchases. Currency translation risk arises when commercial transactions, recognised assets and liabilities and net investment in foreign operations are denominated in a currency that is not the entity’s functional currency. It is not the Group’s policy to take speculative positions in foreign currencies.

The Group manages its currency exposure centrally and hedge the value of future receipt and payment flows in foreign currencies using forward contracts. The Group reviews on a regular basis its exposure and reserves the right to enter into hedges to maintain financial stability and, accordingly, hedging will be undertaken only on contracted and firm flows, whereof the major part are realised within six months. It is the Group’s policy to negotiate the terms of the hedge derivatives to match the terms of the hedged item to maximise hedge effectiveness.

 

[Shahmatt]

@ Paul Lee

Thanks for the excerpt.

So it looks like they will have some schemes in place to counteract a weakening USD.

May buy a few lots of these I think.

 

[lisabnat]

Nam Cheong Investors

Hello, anyone invested in Nam Cheong?

Talk here

 

[edmwwmde]

vested, talk what

 

[Dividends Warrior]

vested, talk what

Talk about upside potential.

 

[Xlusionist]

Talk about upside potential.

downside as well

 

[lisabnat]

i went in at 0.295. what price did you buy it at?
u think can hit 0.350 next year?

 

[koxinga]

Look and understand the business.

 

[endlssorrow]

vested 0.26 liao... huat

 

[lisabnat]

how to understand nam cheong?

Look and understand the business.

how to understand by reading the FS?
i see they low debt, good cash flow, good growth, but they model quick risky. but can also charge premium if demand is right?

 

[lisabnat]

anyone wanna comment here?

 

[Dividends Warrior]

NAM CHEONG WINS MOST TRANSPARENT COMPANY AWARD AT THE SIAS INVESTORS' CHOICE AWARDS 2013

Wow.....impressive!

 

[lisabnat]

haha as in really impressive or is this zzzz news?

 

[Dividends Warrior]

haha as in really impressive or is this zzzz news?

Really impressive.

 

[lisabnat]

Really impressive.

are u vested in Nam cheong? or you are pure dividend play?