StockPick

1. Added in Q305 Results on 15-Jan-06 (Released on 8-Nov-05)


2. Sold my entire stake on 22-Aug-05 after it went xd. Reasons,
   • Switch to other stocks as mkt has dropped but not Super CoffeeMix
   • Price of Super CoffeeMix is artificially supported due to Mr Goi's purchases
   • NAV is $0.334, may drop to that level without support of Mr Goi
   Will still continue to monitor and buy back in the future (see next Q results or if price drop to NAV)



3. Added in 1H05 data into table on 8-Aug-05. For my comments on the results, see blog, Bullrun

Background
I have been holding Super CoffeeMix shares since the mid-90s @ $0.79. I had a quick look on their past 5 years results and ratios from the periodical 'Shares Investment' and their 2004 Annual Report and had bought @ $0.44 on 22-Jul to average my cost down to $0.515. This stock is very illiquid and the price range is $0.405~$0.465 for the past 1yr.

This study will help me decide on whether to add Super CoffeeMix to my portfolio or to get rid of it completely.

Financial Data
All the data in this case study are extracted fm the Super CoffeeMix 2004 Annual Report. Some of the figures in the fllwg table are extracted fm the periodical "Shares Investment",

• Chip Lian Investment (Oei Hong Leong) 12.48%
• Goi Seng Hui (Popiah King) + Tee Yih Jia Food Mfg = 12.24% + 4.16% = 16.4%
• Te Lay Hoon 10.99% + 2.66% (Nominee) = 13.65%
• Teo Kee Bock 6.34% + 6.08% (Nominee) = 12.42%
• Te Kok Chew 2.88%% + 7.69% (Nominee) = 10.57%
• Te + Teo Family (Original Founders) = 13.65% + 12.42% + 10.57% = 36.64%
• Ng Ser Mian 2.64%
• Free Float 28%

• Business : ASEAN 55% , S'pore 29.9% , East Asia 7.6% , Others 7.5%
• Placement of New Shares
  - Jan-04 : $5.02Mil @ $0.45 to Oei Hong Leong (22.51Mil), Goi Seng Hui (12.51Mil) and Ng Ser Miang (10Mil)
  - Dec-03 (Reduce Bank Borrowings) : 20Mil @ $0.33
  - Feb-03 (Owl Acquisition) : 39.1 Mil @ $0.27
• NAV $0.3285 (Q1-05) , PE 12.2 & Yield 2.7% @ Share Price $0.435 on 8-Jul
• Acquired Owl Int'l (competitor) in '03 and Super Continental (coffee powder & creamer) in '04
• Manufacturing contract for P&G in M'sia for Pringles Potato chips

Comments

• Improving fundamentals
  Margin - Improving fm 7% in '01 to 14% in '04 but still looks low
  ROE - Improving fm 5.7% in '01 to ~12% in '04
  Dividend Cover - Increasing fm 2x in '01 to 4x in '04 means more profits being channelled back to biz
  Low bank borrowings - Likely due to capital raised from new shares placement
• Oei & Goi likely to be friendly investors as new shares were placed to them
  Goi - Also in food biz (Tee Yee Jih Food Mfg), may have good synergy
  Oei - Has good China contacts and may help expand China biz (E Asia only 7.6% now)
• Strategic Acquisitions
  Competitor (Owl) - Likely consolidate mkt and improve mkt share
  Supplier (Super Continental) - Vertical Integration will help to reduce cost and improve profit margins

Conclusions
Be warned, the above has been created to justify my recent additional buy of Super CoffeeMix shares. This will be intended for long term hold as Super CoffeeMix looks like a growth stock. Daily trading volume is very low, so it's not recommended for those who may need to sell in the short term as you may not be able to sell at a good price.

My Action

• To take a look at the different SuperCoffeeMix products and competing products next time I go to NTUC Fairprice
• To do taste test and informal mkt survey with family and friends
• To acquire more shares on price weakness. But, will also very likely sell even for $0.005 gain :D

Share Price

• 1mth : $0.435-$0.455
• 3mth : $0.425-$0.46
• 1yr : $0.405-$0.465

Disclaimer : Use the above at your own risk! We'll not be responsible for any losses incurred but you can give us credit if you make money :D

Addendum

• 28-Jul-05 : Goi Seng Hui - From 16.47 % To 16.54 % (Open Mkt Purchase)
• 19-Jul-05 : Goi Seng Hui - From 16.45 % To 16.47 % (Open Mkt Purchase)
• 1-Aug-05 : Goi Seng Hui - From 16.54 % To 16.543 % (Open Mkt Purchase)
• 8-Aug-05 : Q2/05 Results (Added figures to table above)
• 10-Aug-05 : Goi Seng Hui - From 16.543 % to 16.58% (Open Mkt Purchase - 200,000)
• 16-Aug-05 : Goi Seng Hui - From 16.58 % to 16.60% (Open Mkt Purchase - 99,000)
• 17-Aug-05 : Goi Seng Hui - From 16.60 % to 16.61% (Open Mkt Purchase - 31,000)
• 29-Aug-05 : Goi Seng Hui - From 16.61 % to 16.637% (Open Mkt Purchase - 124,000)
• 8-Nov-05 : Q305 Results / Press Release
• 6-Dec-05 : Wuxi Joint Venture
• 13-Dec-05 : PRC Property Joint Venture

Hmmm.... Without the support of Mr Goi, I think Super CoffeeMix share price would have dropped lower :D

# posted by Anonymous @ 7/24/2005 06:18:00 PM