Good day.
What do I like about Pensonic?
1. Extremely undervalued NTA. At the present moment as per last quarterly result, Pensonic is reported to have a NTA of RM0.75 as per most recent quarter. While its share price is traded at RM0.47 currently. However, even at RM0.75 the NTA is still very understated due to its accounting policy to carry properties at COST model instead of REVALUATION model.
2. The company adopted "cost less depreciation model" to value it's land and building. This has reflected an unfairly low valuation of the assets that it presently has. For instance, the property that it is owning in Section 51A Petaling Jaya is carried at rm200 per square feet while the market value is around rm750-850 psf. Valuing it even on a conservative amount of rm600 psf, this would translate it into a gain of RM18million and if the high side of RM800 is taken, then the gain would reach RM25million - on this one property alone. You can do your homework if we are to revalue all. RM25million of gain is translating into about NTA of RM0.20 per share. In the event if all properties are revalued to the current market value, we can see a substantial increase in its NTA and the present price of RM0.47 is traded at huge discount below the more realistic NTA.
Properties held by Pensonic Berhad
3. The business is seasonal. With the HARI RAYA festive season and school holidays around the corners, we can expect revenues to take a good boost. The brand of Pensonic is generally suitable to most average Malaysians. Hari Raya is celebrated worldwide. So sales in Middle East markets that Pensonic has been penetrating into, is definitely going to benefit from this. Probably the much expected "El-niño" could see a higher demand for air-conditioners and fans.
As we can see below the Q4 of Last Year is reported to be LOSS of RM1.3m. It is very likely that financial results are expected to be much better for this coming Q4 that is due to be released within this or next week.
From Most Recent Quarterlies' Announcement:
Short-term prospect - Target Price of RM0.50 to be breached very soon.
Factoring an expectation of healty sales growth and profitability, declaration of dividend in the coming quarter and taking into account the unrecognised gain in property, I am looking ahead for a long term valuation of RM0.80 to RM1.00.
At time of writing, I have shareholding in PENSONI with costs at RM0.45, RM0.46, RM0.465 and RM0.475. Have just acquired more today at RM0.47.
Happy Investing.
Calow
Disclaimer - this is a personal view of the author, purely for sharing purpose. It is not a buy or share call. Trade at your own risk.
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