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*Official* Keong Hong

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Old 13-01-2017, 06:23 PM   #1
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*Official* Keong Hong

Hi all I can't find the thread for this stock. Anyone holding this stock can share more about it?
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Old 13-01-2017, 08:44 PM   #2
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Not holding but is on my watch list
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Old 13-01-2017, 09:07 PM   #3
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buy liao can huat?

TS start the ball rolling?

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Old 14-01-2017, 03:50 PM   #4
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buy liao can huat?

TS start the ball rolling?
http://10percentperannum.blogspot.sg...l/Keong%20Hong
Saw this blog look interesting how the author write the review can take a look.
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Old 14-01-2017, 07:20 PM   #5
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Preliminary research - similar to Chip Eng Seng, construction focused company. Moved from Catalist to mainboard this year, which is a good sign.

Personally I'm bearish on non-diversified construction companies. I do see companies in the same industry diversifying already, but I think the revenue from non-construction segments are not large or balanced enough to stabilise their earnings. For KH, I think they're not diversified enough, so I classify it as a non-diversified construction company.

However, given their large cash hoard, company should be able to weather the challenges ahead. Generous dividend yield compensates for the risk involved when you buy this counter.

Caveat Emptor (not vested)
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Old 14-01-2017, 11:17 PM   #6
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scared div keep dropping, example hock lian seng

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Old 14-01-2017, 11:20 PM   #7
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scared div keep dropping, example hock lian seng
???

hock lian seng dividend didn't drop, it had increased from 0.018 to 0.025

The 0.04 one time was a bumper special dividend
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Old 14-01-2017, 11:34 PM   #8
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IMO, one of the problems with these smaller caps is that despite being undervalued, they may either take a long time or never realize their true value to translate to capital gains (or worse see their ). Now, it may not necessarily be a bad thing if they have a relatively high dividend, but given their small size, the risks are higher compared to larger companies.

Another thing, what is the growth potential of the company? This is one of the problem with many local companies (including those listed). Many of the small caps are focused on the local economy, which makes limits their growth potential (ie become multi-baggers).


Note that these are points, IMO, to think about and discuss. Not taking a stance on this counter. Not vested in this counter.
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Old 15-01-2017, 10:12 PM   #9
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There are a few things I find worrying about this company.

1) Highly paid CEO-cum-Chairman
Probably one of the highest paid CEO/Chairman around for its Market Capitalization. Do note that his salary increased at a crazy rate over the years.

2011, it was stated to be above 500K.
2012, between 1.25 and 1.5
2013, it stayed the same
2014, it gone up between 1.5-1.75
2015, it gone up to between 2.75 and 3M (!!!!!!!!)
2016, stayed between 2.75 and 3M

2) Share Option (? not sure if this is anything to be worried about)
it says here there is about 7m share options not exercised at the highest price of 40cents. It has about 10m in treasury, and about 230m shares in total. I am not sure if this figure is something to be alarm at since I am inexperienced.

PB is about 0.8... okay discount. I don't see corporate or directorship buying back shares for 2016... so I guess current price, as of now isn't anything fantastic.

3) Balance Sheet Worries
Trade receivables makes up a large part of its balance sheet. This company seems to be making a huge investment this year. It says here in the cashflow statement that it loaned 60M to its JV. This is double of any amount it did, in 1 single year, over the last 5 years or so.

History of this company's ROA (net income divided by total assets)
2011- 9.96%
2012- 15.2%
2013- 15.6%
2014- 8.7%
2015- 11.6%
2016- 9.71%

NAV per share
2011- 19.62 cents
2012- 13.35 cents (!)
2013- 41.8 cents (incredible! reduction of 4m shares as well)
2014- 34.4 (rights issue, from 156m to 232.95m shares!)
2015- 49.86 cents (reduction of 6m shares or so)
2016- 59.4 cents (increase of about 3m shares)
This significant increase in NAV might be due to leverage?

Debt to Equity over the years (all bank borrowings + interest-payable financial leases)
2011- 5.2%
2012- 1.66%
2013- 6.93%
2014- 27.9% (!!!)
2015- 59.4% (!!!!!)
2016- 46.6%
Leverage is okay but is the finance cost managable?

Interest cover over the years. (net income / finance cost)
2011- 76.2 times
2012- 301.97
2013- 347.89
2014- 60.69 times
2015- 27.87 times
2016- 8.82 times (!!!!!!!!)

This indicate the company is pretty decent in its management (based on ROA), it is taking on an increasing amount of debt. Its ability to repay debt, from its interest cover, is dropping significantly in the last 3 years.

Trade receivables is worrying high, and customer concentration risk of receivables from 5 customers is about 70+ percent.

At its gearing ratio and that investors are probably at this company for its yield, I recommend a further discount to its current price before investing.

At the moment, there are better companies with lower debt that pays about the same dividends at a lower risk.
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Old 15-01-2017, 10:45 PM   #10
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Thank you for ur detail respond. The debt does look worrying.
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Old 15-01-2017, 10:51 PM   #11
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IMHO the CEO high salary is subjective - many other small/mid caps pay their CEOs well compared to the market cap. Smallest amount I saw is a measly $5k per month. Still waiting for the legendary $1/year Singaporean CEO with many many stock options...

Personally unless you are of CEO calibre, don't bother arguing about CEO renumeration, especially when the company has not run into any financial distress. There will be some who will draw higher than others, and deserve the money to compensate for their blood, sweat and tears, whereas others will be just full of air and smoke and mirrors.

BTW this counter was IPO-ed back in 2011 (source: http://singapore-ipos.blogspot.sg/20...s-limited.html), and it was placement only. Yup, so it's "all in" with the CEO and the company.

Generally, for construction companies, money is usually tied up with trade receivables (obviously, construction is capital intensive, and payment is usually received in phases), and since this is SG, usually the customers are govt or property developers if they are the maincon. Problem is they didn't say whether the customers are "direct to client", or they are working as subcon. I assume they are reputable enough to work directly with property developers, as some of their clients listed on the company website consists of Keppel Land, FCL and MCL.

However, the bright side is that the management seems quite friendly to shareholders with a high dividend yield which compensates for the risk for investing in this counter.
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Old 16-01-2017, 08:52 AM   #12
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I entered in with 3 lots to try for fun .

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Old 25-04-2017, 09:43 AM   #13
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anybody vested in this counter ?

the price went up quite alot over the last month.
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Old 25-04-2017, 10:05 AM   #14
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anybody vested in this counter ?

the price went up quite alot over the last month.

I am holding. Small stake, 7000 shares. Made me about 15% for the 1 year I held it, so I am happy.
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