Monday, March 31, 2014

Eckert & Ziegler AG

I had written about Eckert & Ziegler last month.

This post is to look at a recent development which may have an impact on Eckert & Ziegler.

Nordion is a similar company in Canada, which has recently i.e. yesterday been acquired.

Eckert & Ziegler has an Enterprise Value / EBITDA multiple of 4.87.

Data provided by Capital IQ, except where noted.
Valuation Measures 
Market Cap (intraday)5:128.29M
Enterprise Value (Mar 31, 2014)3:118.25M
Trailing P/E (ttm, intraday):13.59
Forward P/E (fye Dec 31, 2014)1:N/A
PEG Ratio (5 yr expected)1:N/A
Price/Sales (ttm):1.08
Price/Book (mrq):1.59
Enterprise Value/Revenue (ttm)3:1.00
Enterprise Value/EBITDA (ttm)6:4.87

Nordion which has been acquired was having a multiple of 6.05.

Valuation Measures 
Market Cap (intraday)5:644.47M
Enterprise Value (Mar 31, 2014)3:363.63M
Trailing P/E (ttm, intraday):2.36
Forward P/E (fye Oct 31, 2015)1:12.39
PEG Ratio (5 yr expected)1:-0.28
Price/Sales (ttm):2.60
Price/Book (mrq):1.40
Enterprise Value/Revenue (ttm)3:1.46
Enterprise Value/EBITDA (ttm)6:6.05

This means that an acquisition price of 11.75, Nordion has a EV/EBITDA multiple of 6.82.

Applying that multiple to Eckert & Ziegler, provides one with a target price of 34.01, against its current price of 24.26.

The upside is around 40%.

I am not currently long the stock as I wanted to wait till it hits 20.87 before buying it.

However, with Nordion's acquisition, chances are somebody will make the connection like me and bid it up.

Hence, I am planning to go long within the next couple of days.

Sunday, March 30, 2014

Nordion Inc

I had written three weeks back on Nordion.

I had also posted this on value

There was a valid argument on valuebuddies, that i should be wary as the stock had not broken 10X in the last two years.

Instead of cutting the trade, I doubled up on the share at 10.56.

The logic was that instead of harvesting the share, if I am convinced enough about it, i should double my position if I had conviction.

Accordingly, I had doubled my position on 26th March 2014.

Now, there is news that Nordion is likely to be accquired .

At the purchase price of 11.75, the ROC is 11.2%.

Chances are that there will be few such trades of mine which will have a positive outcome.

However, I am quite happy with the decision to double my position.

There is some element of luck as well in your investment decisions, as by right, I should have sold off at 10.

Monday, March 17, 2014

Keppel REIT

From Website :

Keppel REIT is one of Singapore's largest real estate investment trust ("REIT") with assets under management of approximately $7.2 billion as at 31 December 2013.
Here is a link to their site

This is a share for which I got a small allocation through the Keppel dividend in specie. While looking around for a share to invest in, I decided to look closer at this.

The other reason is that I am trying out the EMA 20 upward cross as a technique to enter, which seems to suggest that today is a good entry point.

To ensure that I am not overpaying, I looked at evaluating this on a Dividend Growth basis. I am using only a one year growth rate for this share instead of the normal 5 or ten year trend.

Over the last one year, the DPU has increased 1.42%. At the current price of 1.15, it is priced to deliver a 8.3% return, which is good enough in the long term for me.

Hence, I have taken a half position in this stock which amounts to 2% of my capital.

The way I will evaluate this is to see what is the Distribution yield i have got over a year, which should be around 6.6%. Over a full five year cycle, if I have achieved over 8.3% p.a returns, then this would be a success.

Tuesday, March 11, 2014

Portfolio Sale - Homeserve

From Google Finance : Homeserve plc is a United Kingdom-based company engaged in the provision of home emergency repairs. The Company operates in five segments: UK, USA, Domeo, Spain, and New Markets. Its products cover plumbing and drains, central heating, ventilation and air conditioning, electrics and household appliances, such as showers and boilers. The Company provides home emergency and repair services to over 4.9 million customers across businesses in the United Kingdom, the United States, France and Spain. It also has developing businesses in Italy, Germany and France. The Company’s subsidiaries include HomeServe Assistance Limited, HomeServe Enterprises Limited, HomeServe International Limited, HomeServe Membership Limited and Reparalia Direct SL.

Here is a link to the company ;

I had taken a small position in the company in October 2013 at an entry price of 2.35 GBP.

In keeping with my method of extreme momentum investment i had doubled up when the share price increased to 2.97 i.e. a 25% increase.

Yesterday, i exited the position since the share price has fallen below the 20 day EMA.

However, instead of a full exit, i have left Other People Money (OPM) in the market, i.e. recovered my capital and let the rest be.

You may argue that it is better to have sold at 3.5, well , actually yes, but the method i use is to sell when it falls below 20 day ema for 2-3 days in a row.

For now, i have a small position which is still long Homeserve, more to see what it gives in the long run.

Since it is OPM, chances are I will retain this for the long haul.

With this addition to OPM, OPM now constitutes 1.5% of my portfolio size. One of the goals I have is for OPM to reach at least 3% of portfolio size by 2014.

Monday, March 10, 2014

Nordion Inc

This is a post about Nordion Inc.

From Google Finance : Nordion Inc. (Nordion) is a global health science company, engaged providing products and services used for the prevention, diagnosis and treatment of disease. The Company’s business segments include Sterilization Technologies and Medical Isotopes as well as certain corporate functions and activities reported as Corporate and Other. On July 13, 2013, BTG Plc announced that it has completed the acquisition of Targeted Therapies division from Nordion Inc

Seeking Alpha has a few good articles on Nordion. Here is a link to find out more on Seeking Alpha .

The central thesis for investment was that it is undervalued and has a 20% upside potential as of Sep 2013.

A good author for this is Tyler Kaster, who I think wrote the original pitch which I acted on.

Accordingly, i went long at 7.54 in Sep 2013.

The key jump came on 8th Jan.

I am for now, letting this ride with a monitor in terms of a trailing stop loss, to see how much further upside I can capture.

Price as of writing today is 10.16, anything from here is a bonus.

Full Disclosure : Long Nordion

Thursday, March 6, 2014

Portfolio Sale - Haw Par Corporation Limited

I had bought Haw Par Corporation in August 2013.

The logic for that was a 2.74% yield, with a dividend of 0.2 SGD per Share at a purchase price of 7.37.

Of late, I have been reading some of the DIY investor's thinking where, essentially one harvests the dividends and redeploys them once one achieves 5 years of dividends.

Today, I sold out of the stake at 8.33, not exactly 5 years dividend, around 4.78 years.

The chart below shows the ROC of 17% odd and in the process, i collected one lot of dividend as well, so, all in all, it is ok.

The reason i sold out was that there seems to be an inexplicable drop in the last few days on the share price, it had dropped below the 20 day EMA, for 2 days, so, i decided to cash in my accumulated appreciation .

For now, no positions in Haw Par

Wednesday, March 5, 2014

CDW Holding

This is a post on the intrinsic value of CDW Holding Ltd.

Parameter 2013 2012 2011 2010 2009
Net Income 11,330 11,000 5,000 3,000 1,000
Depreciation 2,840 3,000 3,000 3,000 4,000
Changes in Working Capital -1,523 -2,000 -1,000 -5,000 7,000
Capital Expenditures -2,117 -2,000 -3,000 -1,000 -2,000
FCF 10,531 10,000 4,000 0 10,000
Total Current Liabilities 35,785 48,000 46,000 37,000 32,000
Total Equity 68,987 63,000 58,000 55,000 52,000
Total Liabilities 41,000 56,000 51,000 45,000 41,000
Common Shares Outstanding 469,859 477,942 499,150 503,534 503,534
Capital Employed 74,202 71,000 63,000 63,000 61,000

These above are the salient factors to do up my model for long term cash flow, book value and equity growth.

You will notice that equity growth rate is around 7.32% p.a, while outstanding shares are declining slightly at 1.72% p.a, leading to a book growth rate of 9.2% p.a

Equity Growth 7.32%
Shares Growth -1.72%
BV Growth 9.20%

Book Value 0.15 0.13 0.12 0.11 0.10
Using my normal simulation model, the range of intrinsic value provides us with a range of price for the share between 0.20-0.29, using a 10.76% discount rate for future cash flow.

At current dividend rates, it is a 10.28% yield, using annual divided of 1.2 US Cents and current share price of 14 Singapore Cents .

Yes, there is concentration risk of one customer, however, this stock to me screams value at current prices and I am likely to purchase a position in the next week or so.