looks like it has been beaten up by Mr. Market recently...

and I noticed interesting buy/sell queue today:

buy vol:  50  

buy price:  0.285

sell price:  0.300

sell vol:   756

Vol. transacted:   0

This sounds very negative.

From Techcomp Third Quarter Results Announcement

The recent tense Sino-Japan relations had negatively impacted the Company’s orders received of Japanese products in PRC. Hence, the management expects the sales of Japanese products in the fourth quarter of the year will be adversely affected.
Given that a significant portion of our distribution products are Japanese products and the Group’s revenue in fourth quarter of the year is traditionally much higher than that of other quarters of the year due to the seasonal pattern of its customers’ demand in PRC, we expect the revenue as well as the profitability of our distribution business will be adversely affected in FY2012. The Company’s distribution business will continue to be affected in the event that the negative sentiment persists. The Group is taking steps to mitigate this impact by diversifying its supply chain.
Though more enquires from the Europe customers were received currently, the Group believes the trading condition in Europe market will remain challenging. The Group will continue to leverage on its low cost manufacturing base in the PRC to achieve cost savings and operational synergy for its operations in Europe.

Did anybody ask the management how are they faring in China when the sentiment towards Japanese brands is so bad now. Noted their key principal is Japanese (Hitachi)

I am quite sure that the Company did not issue a profit warning given that most of their sales are in 4Q and the Japanese-PRC crisis hit in September.

Things may not turn out to be good in 2012. But I believe mid-long term, we will see better improvements.

Tehcomp is worth about 60 cents.

Kabouter Mangt. open market purchase Techcomp from 26,495,000 (11.4%) to 28,700,000 (12.34%)

Attached --- Sept 14 report on Techcomp by SBI, fyi.

Highlights:

 Strong growth in 1H FY12/12A with NPAT US$1.1m, +86.6% YoY.

 PRC market maintains primary position in the future.

 66.9% of total revenue from distribution segment with an increasing forecast in the future.

 Some potential UK company would be the new acquisition brand after Precisa, Froilabo and IXRF.

 Stable CAGR, growth point in since & technology; public health care; food safety areas.

Attachments
 1298VH140912.pdf [164 KB]

erelation, do you know why the company held a briefing for analysts in HK instead of Singapore? I don't see reports on their events in Singapore but first time they have one in HK after dual listing. They are getting more friendly investors there which is why the valuation in HK is higher . TECHCOMP: Stellar Half Highlights Healthy HK Listing

Hi Wendy,

During my last conversation with Gilbert, the CFO last week, he told me that there are at least 8 funds holding shares in the Company. The names of the funds were not disclosed to me as this is non-public information.

This explains the low liquidity.

I understand from my broker in Hong Kong that Standard Chartered mopped up 2 million shares from open market after their HK analyst wrote a visit note on Techcomp.

Kayhian (Shanghai) also wrote a note on the Company though I have not seen it yet.

BTW, Kabouter is a micro-fund by US standards but not really a smallish fund by Singapore standards. I have a friend who invested with them and their AUM should be around USD 300-500 million. Their best investment in Singapore to date is Thomson Medical Centre which I believe they made more than 100% returns in 2 years.

Kabouter is probably a smallish fund. Surprised that it can accumulate so much of Techcomp. What is its Assets Under Management?

Besdies K, any other fund inside Techcomp?

I note that Kabouter Fund bought a tonne of shares of Techcomp last week. Its stake in Techcomp has gone up to 12.13 %. Kabouter seems to be a value investor but not a major fund on a global basis. There is an article on them talking about Techcomp:

TECHCOMP: US fund manager, major shareholder shares insights with analysts

3.140 HKD closing today + HKD0.040.

In HK, the vol was tremendous at 1,608,000 shares.

In HK, the stock closed today at 3.100 HKD.
1H result will be released soon. Hope for the best!

Today Techcomp closed at HKD3.11, equiv to 51.8 SG cents.
Volume: 428,000

In SG, Techcomp closed at 44.5 SG cents. Well, well. Arbitrage is poss.

Share price closed HKD 3.29 equivalent to SGD 54.8 cents. A 20% premium compared to SG share price.

Take at 44.5 cents already.

Don't care so much liao

Techcomp is trading at HK 3.18 in Hong Kong with over 400,000 shares traded.

In Singapore, there is no trading with sellers at 44 cents (HK 2.64)

OMG....

UOB KAY HIAN (HONG KONG) LIMITED


Techcomp (1298 HK)           Not Rated
Price/Target: HK$2.98/-  Mkt Cap: SG$100.0m          Daily: Vol 0.259m         1-Yr Hi/Lo: HK$3.20/2.06

Company visit takeaways
Analyst: Carol Dou                Tel: (8621) 5404 7225 ext.811

What’s New
We visit Techcomp Holdings last week. Here are the key takeaways.

Revenue grew at 21.0% CAGR in 2002-11. The total revenue reached USD154.1m in 2011, of which distribution and manufacturing business contributed about 68.8% and 31.2% of the total revenue respectively. About 67.9% of the revenue from distribution business was related to Hitachi High-Technologies in 2011. Its largest market, China, brought approximately 77% of the total revenue for the company in 2011. The company expects the total revenue will continue to grow at about 20% CAGR in the next few years driven by the strong growth in China, on rising concern over food safety, as well as government support and increasing investment in the science and technology, and R&D. This is highly achievable based on our industry check.

Net profit margin expected to improve to reasonable level in 2012. Given a relatively high entry barrier, the company has been able to retain a steady gross margin of about 30% in the past few years. Impacted by the IPO related expenses, the net margin stood at 5.4% in 2011, decreased significantly from 8.0% in 2010. The management expects the net margin will return to about 8% level in 2012, hence, the net earnings may increase significantly by over 60% yoy in 2012.

Growth strategies: a) Continue to growth through M&As and strategic alliances. b) Continue to expand distribution network in Asia and Europe; c) Integrating its newly acquired business; and d) Widening product offerings in Europe etc.

Net gearing and operating cash flow: Techcomp has a net debt position of USD21.2m at the end of 2011 (net gearing 33.6%), increased substantially from USD4.3m a year earlier. The Accounts receivable days is also increased from 123 days in 2010 to 156 days in 2011. Operating cash flow deteriorated from USD6.3m in 2010 to USD-13.8m in 2011. According to the management, the company expects to finance its future M&As and expansion activities with cash and bank borrowings. We therefore expect the debt level may continue to increase.

Valuation / recommendation.
Based on consensus EPS 2012 estimates of USD 0.055, Techcom’s HK shares are currently trading at 7x 2012PE, considerably low compared to its scientific equipment peers listed in US (about 16x 2012PE). At present, the HK shares are trading at a premium (about 12.7%) to its Singapore shares.

Risks and concerns: a) Universities and government R&D centers in China are the major customers of Techcomp; given the limited client base, competition between Techcomp and foreign brands are intensifying. b) Rely heavily on the business partnership with Hitachi High-Technologies. c)Newly acquired European business unlikely to turn profitable in the short-term given the weak economic condition of the European market. d) Risks concerning future acquisitions and new product launches. e) Possibility of continued weakening of the operating cash flow.

Hi Tanya,

There are other cost that you haven't factor in....

1) Brokerage Fee at HK side.
2) Exchange Rate Risk

The exchange rate movement for HK vs S$ can be deadly..... it can significantly increase your profit or causes the transaction to run into losses. Take a look at the past 1 year movement of HK/S$

http://sg.finance.yahoo.com/q/bc?s=SGDHKD=X&t=1y&l=on&z=m&q=l&c=

The exchange rate ranges from 5.9 to 6.49...

In my opinion, 5,000 shares may not worth the trouble as during the transfer period of 6 - 8 weeks, we are basically out of the market. Can't sell if the price shoot up. I am more concern on the forex movement.

Regards
erelation