$Powermatic Data(BCY.SI)

A short case study - Powermatic Data Systems Ltd

I first noticed the stock yesterday when it was trending on investing note, at price $1.62. At that point in time, it was already up about 13% from its $1.44 opening.

Taking a quick look at the figures,

Market cap = $56.5 mil
Cash on hand = $26.5 mil
Long term liability = $0

Enterprise value = $30mil

Investment property = $30mil
Investment & bonds = $8 mil

At this point, I'm getting interested in the company. I can take over the company and instead of paying a single cent, I can get around $8 mil back ($30 - $30 - $8 = -$8mil). And this figure may be undervalued if the investment is recorded at cost.

Full analysis shows performance of company is relatively stable, giving me confidence to estimate owner's earnings at around $4.1mil. Yield on EV is at 13.66%.

Without counting in further upside written in detail in CIMB report, I am already very interested in the company.

A quick scan on potential warning's signal doesn't yield anything that may be a concern. Owner owns a huge portion of shares, no insider trades, no large share issues.

Went in yesterday at $1.63.
Sold today at $2.49 (51% return)

At that price, EV is $60mil. Not only do you not get benefit from being under book value, your yield drops to 6.83%. With a return on equity at a lackluster 8%, that is not a good enough price for me.

Conclusion:
1. Avoid crowd think
Don't make an investment because its the next "in" thing, or it has been going up. Make an investment because it makes sense to you.

2. Avoid anchoring.
Just because a price have gone up doesn't make something expensive. How cheap or expensive something is depends on where value is in relation to price.

3. Avoid what you can't value.
Someone says creative has infinite upside. In my opinion, I can only see downside. Take care of your downside, and your upside will take care of itself. Buy things that allow you to win big, and when you lose, you can't lose much.

4. Understand a company before you make any investment.

Will it go up further? Maybe, but it would be out of my investment scope.
By the way, this stock passes @TUBInvesting scorecard for value stock as well.

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26 likes
46 comments
Pheng

Very low liquidity and highly manipulated. Test your patience to the max. Owner is elderly and no successor. Avoid if can or watch out for sudden spike up...buy low and released immediately, dont hold

SallyH

Reply to @jeremyowtaip : Same thoughts. This type of company is a good takeover target.

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christophertan0

Congrats to u. I bought at a High and sold off at a loss to move to other counters.. good luck to all who bought at a Low.. this was a lesson to me nonetheless

christophertan0

Reply to @Simpleinvestorsg : Yes totally agreed, it was a good lesson not to chase price haha

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jeremyowtaip

Great catch there with your astute working out of the important details to decide that was a screaming bargain! I observe that it's share price went down again after spiking up on Mar 6. Wonder what could have triggered the spike in price on Mar 6 apart from the undervalue you discovered? If that were the only case for the spike on mis-pricing, I wonder why did the share price fall again to now a lower level?

jeremyowtaip

Reply to @Simpleinvestorsg : However, being able to make good sense of the details in your sharing and act upon it shows you made a great call to buy and profit from it! It is still impressive of you to have made the decision and profited 51% within two days!

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theintelligentinvestor

Very nicely executed! Impressive! Much to learn from you. Congrats!

theintelligentinvestor

Reply to @Simpleinvestorsg : Haha, I am but a learner.

Your 51% gain in 1 day is a great showcase on how to do it right for value investors. Yes, could have some luck factor but I believe strongly that reward favours the prepared. Your experience, temperament, rational thinking an knowledge of the company were clearly demonstrated when it matters most.

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lbs

"By the way, this stock passes @TUBInvesting scorecard for value stock as well."
-> http://tubinvesting.blogspot.sg/2016/09/th...

TUBInvesting

Reply to @lbs : Too bad I did not buy at any point in time. But yes, my ultimate scorecard scored a pass as well!

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Pheng

Jeeped yesterday @1.61, out this morning @ 2.40.

TUBInvesting

Reply to @Pheng : Haha... I didn't really say anything. just that I still will not touch them. Anyway glad it helped.

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Pheng

Very sensible sharing. Thank you!

luxcan

Haha next time before u buy, do a quick shout out so that we slow turtles can catch in time

luxcan

Reply to @luxcan : at where? haha so far I just follow him only.

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clim

nice analysis. Did @tubinvesting sell as well? since you bought it much earlier i think?

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