Orient Century undervalued?
I haven’t check out some companies that i analyzed in the past, possibly due to work and not giving a damn about finding companies for a couple of months.
Thats when i really felt in the mood to look for something to buy should the market snap back. I notice Orient Century again.
Back some time ago, I analyzed the full year earnings of Orient Century, and i state that it has a good cashflow yield, return on investment capital and a solid balance sheet.
since then it has fallen alot. Last i check, it fell to 38.5 cts. So what went wrong?
Judging by the last quarterly report, nothing much! Most price fall nowadays can be attributed to systematic market volatility.
Lets look at the quarterly report. Relativly speaking, the profits are largely the same as last year quarter. Thats what you expect from education industry, where if you don’t price yourself out of it, business tend to be stable. (Can’t say the same about $100 martial arts lesson!)
The best thing is this: Operating Cashflow have maintained at 17 mil RMB and they do not need to have much capital expenditure or capital expansion.
This adds 17 mil straight to their 190 mil of cash. So a falling market cap and a rising cash horde. What does that equate to?
Their last enterprise valeu is 114 mil RMB and if they do not grow their cashflow at an increasing pace, their terminal net operating cashflow after tax is around 47 mil RMB or so.
That means if u buy it at 38.5 cents now you are buying 2.4 years of cashflow. I think thats cheap. This business could sustain past 3 years!
Note: this ain’t your average dividend yielder that i post most of the time, but nevertheless, it does seem undervalue to me.
Related posts:
- Orient Century
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- Bought Telefonica (ADR) $TEF:Undervalued Dividend Income Stock?
- C&G Industrial Holdings:Cash more than Share Price?
- ST Engineering: Might not be as cheap as you think
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Hi Drizzt
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Just dropping a note to give you a heads-up for a chance to win a $10 Popular Bookstore Voucher.
Contest ends on Wednesday, 23 July 2008 at 12.00 noon Singapore time.
Have a great Sunday!
Panzer