Kingboard Copper Foil Holdings Limited

SGX:K14 – 0,275 SGD

1kr50öreKingboard Copper Foil Holdings Limited is an investment holding company. The Company has two operating divisions, which are polyvinyl butyral (PVB) business and license business. PVB business includes manufacturing and trading of PVB and related products, and License business includes earning license fee income from its licensed assets. Its subsidiaries include Blue Atlas Limited, Hong Kong Copper Foil Limited, Fogang Kingboard Industry Ltd, Kingboard Chemical Investment Limited, Kingboard Chemical Investment (Hong Kong) Limited, Chung Shun Copper Foil (MCO) Limited, Kingboard (Fogang) Specialty Resins Limited, Kingboard (Lianzhou) Copper Foil Ltd and Jiangxi Hong Feng. – Google Times.

1. Adequate margin of safety (criterion a) or b) must be met): 

a)

  • P/NCAV < 1x
    • 0,72x 

&

  • EV/Operating earnings(5y&10y) < 3x
    • 5y =  -10,1x 
    • 10y = -3,4x 
      • Negative EV and positive operating earnings 5y and 10y.

b)

  • P/NCAV < 0,75x
    • 0,72x 

2. The risk of permanent loss is low:

2.1 The risk of bankruptcy is low (criterion a) or b) must be met):

a)

  • Debt/Equity < 25 %
    • 0 % 

b)

  • Z-score ≥ 3
    • 6,55

2.2 The company’s business model is not totally unprofitable (criterion a) or b) must be met):

a)

  • Positive retained earnings:
    • 1,468 MHKD 

b)

  • Positive aggregate operating income for the last ten years:
    •   1,182 MHKD 

3. The company does not have a shareholder unfriendly capital allocation:

  • Shareholder yield TTM ≥ -2 %
    • Dividend yield TTM = 0 %
    • Net buyback yield TTM = 0 %
    • Net debt paydown yield TTM = 0 %
      • =  0 % 

Other notes:

MoS

Disclosure: The author is long SGX:K14 when this analysis is published.

7 thoughts on “Kingboard Copper Foil Holdings Limited

  1. “Therefor they might just start buying back shares at the current market price since the valuation of redemption is likely going to be a lot higher than current market price.”

    The deadline for minority shareholder who wishes to have their shares in the Company redeemed upon the same terms and conditions as the Petitioner was on April 7, 2016. How would a buyback affect this?

    Like

    1. That’s correct Don, I was a bit sloppy in my explanation. What I meant was that the redemption, if any, may trigger a mandatory general offer under the Takeover Code (i.e. the company is forced to buy all minority shareholders). You can read more about the Take-over-code here: http://www.kbcopperfoil.com/upfile/2016110709471993438.pdf

      With that said and since the valuation for the redemption hasn’t jet been decided the company would want to start buying back shares already since the redemption = forced buyout will be at a higher price than current market price.

      I hope that makes my argument a bit clearer 🙂

      Like

      1. Makes sense. Two questions…
        1) What were the results of the SGM?
        2) Has the company ever adopted a share buyback candidate?

        Like

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