tag:blogger.com,1999:blog-28021668.post7927112276249502187..comments2023-10-12T21:12:41.408+08:00Comments on Value Investment - Musicwhiz's Journey: Musicwhizhttp://www.blogger.com/profile/10950754156386935254noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-28021668.post-30654111429369271932007-07-28T14:23:00.000+08:002007-07-28T14:23:00.000+08:00Investors must estimate the intrinsic value of the...Investors must estimate the intrinsic value of the biz to be sure of the investment, esp. when the company is going thru major changes for further growth into the future. This is equivalent to investing into a new business (not withstanding the Rights excerise has been completed). <BR/><BR/>Let me harzard my calculation: based on last year CFIL earns US47M for PAH (discounted by 36.1%). This is conservative as not all VOA have not been fully running last year. Assuming PAH biz earns similar percentage of 39% next year. (Not excessive as for the past 7 years, PAH growth is 43%). With these one can expect PAH profit to be in the region of S$150M (or about 88%) next FY, hence EPS of $0.095. With a discounted rate of 4% (US treasury rate into the future for the next 10 years), one can expect PAH value to be in the region of S$1.60Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-28021668.post-47471868039122983912007-07-28T11:17:00.000+08:002007-07-28T11:17:00.000+08:00Hi Anonymous,For Point 4, yes there is no free lun...Hi Anonymous,<BR/><BR/>For Point 4, yes there is no free lunch and I think Management is prudent to split the charter into fixed and variable, such that as you said, the expenses do not stack up daily.<BR/><BR/>Point 6 - A little hard to estimate this value as right now it is unclear how the earnings apportionment works for CFG and PAH. The fact that they have different financial year-ends doesn't help either. Wish PAH or CFG would align their financial year-end to ensure conformity in reporting.<BR/><BR/>Point 9 - Hey thanks ! It could indeed be possible, as you mentioned. If that's the case, then I think the increase is justifiable.<BR/><BR/>To: another Anonymous<BR/><BR/>Yes, the higher gearing as a result of this rights issue exercise and CB issue is of concern. But as you rightly pointed out, the operating cash flows from their fishing activities still manages to voer their interest and finance costs. Whether they can continue to do so is the question, but I remain fairly optimistic. Only when global fish supply decreases or global fish demand tapers off, then I will start getting worried.<BR/><BR/>For the Note 25, refer to Anonymous' previous point which indicates it may be due to the US$82 million paid to vessel owners for the use of their vessels.<BR/><BR/>Usually, for bank loans, the repayment is monthly with interest imputed, with a certain fixed repayment period. The company can choose to slow down or speed up payments in order to reduce the interest computed on principal.<BR/><BR/>I think your observations are pretty good ! Please continue to share, it's been a learning experience for me as well....:)Musicwhizhttps://www.blogger.com/profile/10950754156386935254noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-85085746493739061292007-07-28T00:37:00.000+08:002007-07-28T00:37:00.000+08:00Hi, I have been following your blog and I personal...Hi, I have been following your blog and I personally find it insightful and learnt a great deal of stuff. So just wanna say thanks for sharing. <BR/><BR/>With respect to Pac Andes results, I share the same sentiments and find the high level gearing abit uncomfortable. The only comfort I get is that the operating cash flows still covers the interest expense at ~1.9x and EBITDA covers the finance cost ~4.28x (including removing the gains from dilution). So still pretty alright in my opinion. <BR/><BR/>I was equally puzzled on Note 25, where the prepayments for fish has increased substantially to HK$500 million. <BR/><BR/>Another concern I have is that the current portion of interest bearing bank borrowings stands HKD 1246.664 million. I am wondering what is the mode of repayment for this current bank loan. <BR/><BR/>I understand that I still do not have much experience but I hope that I can get some pointers and learn from the more experienced people around me. Thanks!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-28021668.post-76201191174486072362007-07-27T23:14:00.000+08:002007-07-27T23:14:00.000+08:00on point 9 - this prepayment should be the us$82m ...on point 9 - this prepayment should be the us$82m paid to the vessels owners for the initial 10 yrs. value seems close anyway.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-28021668.post-21519919672371973282007-07-27T23:06:00.000+08:002007-07-27T23:06:00.000+08:00on point 6 agreed with you totally. as such 38.1% ...on point 6 agreed with you totally. as such 38.1% growth should be used in all intrinsic value calculations for conservative investors, and not the 49.7%. could you then attempt to est this value?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-28021668.post-73950314273396414242007-07-27T22:58:00.000+08:002007-07-27T22:58:00.000+08:00point 4 - i guess there is no free lunch. maintena...point 4 - i guess there is no free lunch. maintenance costs for the vessels could have been taken as a total package of the voa. of note, the CFIL mgt (63.9% part of PAH on 23 jul 07) has exercised a prepayment of the fixed charter hire for voa1 for the initial 10 yrs instead of daily expenses per vessel, saving a great deal. Is this a sign of prudent?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-28021668.post-35727312907448931862007-07-27T16:40:00.000+08:002007-07-27T16:40:00.000+08:00Hmm, well from that perspective I guess the owners...Hmm, well from that perspective I guess the owners of the vessels would ensure PAH does book some profits so that it flows back to them eventually. However, I think the risk is for them to understate or "delay" expenses due to incomplete voyages, which may then distort the books. It is subtle and probably not noticeable, but it still is a possibility.<BR/><BR/>As for whether they can sell all the fish, with rising demand from China and most of their markets; I think this should not be a problem in the near term.Musicwhizhttps://www.blogger.com/profile/10950754156386935254noreply@blogger.comtag:blogger.com,1999:blog-28021668.post-49471386393253454632007-07-27T10:27:00.000+08:002007-07-27T10:27:00.000+08:00I read with great interest and would like to comme...I read with great interest and would like to comment on your point 3. There is a profit sharing (after expenses), some 20%, with the owners of the vessels. This is also expense to PAH shareholders and hence the reason of the clause. For any loss making biz, the owners of the vessels would also not receive any profit. From this point of view, wouldn't it be beneficial to PAH and the shareholders, not to payout the profit until to profit is recognised? Is interesting to find out whether they are able to sell all the fish they catch though!Anonymousnoreply@blogger.com