Frencken Group Limited

Company Background

Frencken Group Limited, an investment holding company, operates as a capital and consumer equipment service provider primarily in Asia and Europe. The company offers integrated one-stop outsourcing solutions. It operates in two divisions, Mechatronics and Integrated Manufacturing Services (IMS).

Dividend Information

2012: 0.0061

2013: 0.005

2014: 0.014

This wouldn’t be a dividend play in my opinion. The 0.014 dividend in 2014 doesn’t seem sustainable. I feel that the company would do better by keeping the money and growing the company instead. Holding onto a good sizeable amount of cash would be better for them seeing that their cash holdings is low and if they could reduce their debt levels, even better!

Price Trend

6-year: Uptrend

1-year: Downtrend

chart (12)

Currently price is at 6-year trendline support level (0.21). This is the third time the support line is being tested. Trend channel is visible with resistance at 0.39-0.40. This provides an opportunity for 100% capital appreciation if held for 1-2 years.

Financials

Income Statement

Income Statement

Total Revenue: Increasing y-o-y

Gross Profit: Seen 100% increment from 2013 and manages to sustain and improve!

Net Income: No growth in this area, but does offer some hope for improvement.

Balance Sheet

Balance Sheet

Total Assets: Growing well

Long-term Debt: Remains low, a thing that I like!

Current Liabilities: Ballooned this year, largely due to the spike in Trade Payable and some borrowings in 1Q and 2Q 2014 respectively.

Retained Earnings: Good and sizeable amount, leaves plenty of room for opportunities.

Ratios

Ratios

ROA and ROE ratios are nothing fantastic

Net Income margin lies at 3%

Debt Ratio below 30%, a healthy level in my opinion!

Valuations

P/B Ratio of 0.443 is great for value investors

Conclusion

I like this company not so much for the fundamentals, but more for the technicals. Fundamentally this company does not seem to have much of a problem. At current price level, it seems like a very attractive price to pay for a great value! A 50% discount from book value, not an easy find!

The current problem why the share price is so depressed is likely because there is no President to run the Group. In recent times however, we can see that the Group is actively taking measures to look for a suitable candidate through the “Select Committee  to identify and shortlist suitable candidates to serve as President of Frencken Group”. We can see that the price seems to just be resting until a new President spearheads the Group.

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2 thoughts on “Frencken Group Limited

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