WEEK 45 3RD NOV 2019: ANALYSIS ON UNI-ASIA(CHJ.SGX), GOLD, USD INDEX

Disclaimer: All information shared is solely for learning purpose and it does not constitute to a buy/sell call.

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We are happy to share that InvestWhizz Telegram has reached 300 members! As promised, I would be performing 1x free In-depth Technical + Fundamental stock review the 300th member (Congrats Emma!). The stock selected by her is Uni-Asia Group (CHJ), listed in SGX.

 

Uni-Asia Group Analysis:

Uni-Asia Group Limited is listed in SGX. The Company focused on providing asset/investment management services pertaining to ships and properties, as well as advisory services.

The Company’s segments include Shipping and Property and Hotels.

Shipping segment has three sub segments such as Uni-Asia Shipping, Maritime Asset Management, and Maritime Services.

 

Property and Hotels segment has three sub segments such as Property Investment (ex Japan), Property Investment (in Japan), and Vista Hotel Management.

 

(Source: Uni Asia Website)

 

 

 

Fundamental analysis:

 

2013 2018 CAGR
Revenue 73,878 123,281 11%
Gross Profit 10,541 11,859 2%
PAT 5,641 3,920 -7%
Finance cost -2,509 -6,239 20%
Total Debt 86,113 155,155 12%
Ratios:
Gross Profit Margin 14.3% 9.6%
Net Profit Margin 7.6% 3.2%

 

  1. Revenue growing overtime with a compounded annual growth rate (CAGR) of 11% since 2013.
  2. Profit after tax dropped by 7% compounded. This shows that Uni-Asia would be facing a upward cost pressure whereby it is eroding their margins.
  3. Finance cost increased substantially over the years with a 20% CAGR (Trailing 12 months is ~8.2M)
  4. Total Debt increased from 86M to 155M
  5. Accounts Payable & Receivable remained lean without any red flags
  6. Increased Assets & Liabilities in 2019 due to IFRS 16 implementation – recognition of right of use asset concept. This showed a 266M assets and 256M liabilities previously not picked up.
  7. In 2016, company had an exceptional impairment of 8.6M due to downturn in shipping industry. In addition, a provision of 3.5M is made on contracts that are costing more to deliver as compared to the economic benefit the contract provides. While Uni-Asia mentioned in their recent financial statement that dry bulk industry remained weak; we are in the view that the worst is over (i.e. by looking at Baltic dry bulk index – it went up from low of 729 to current 1.7k)
  8. In Q4 2019 Financial statement of Uni-Asia, it has a record of 3.85m fair value adjustment gains from Hong Kong commercial office. We are in the view that this could pose a potential downside risk in the future due to the sustained Hong Kong protests. However the ownership of such properties are commercial properties, it would have lesser immediate on Uni-Asia’s financials due to HK Protests.
  9. Uni-Asia have expanded their Hotel Vista brand in Japan and it is currently going on well. Reviews on the hotels from Agoda or Booking.com are mostly positive.
  10. Insider trading by management of the company. From the past track record, we are seeing purchases from management/key stakeholders and no dilution of shares.
  11. With the diversification of business from Shipping to Property & Hotel management, we can see it has somewhat helped Uni Asia to maneuver through difficult times.
  12. Key operational cost pressure is due to vessel business unit where the cost to sustain the business is increasing. As the industry is cyclical in nature, company would need to wait for shipping industry to rebound where revenue can be higher to support the increase in operational cost.
  13. Ratios: PE – 15.8x, Price/NTA – 0.56, Div yield ~6.9%

 

Technical Analysis:

1. Mid/Long term analysis – Chart is still on a downward trend (basis moving average analysis).

2. Short term showing signs of rebounding. Critical for Uni-Asia to close above 0.735 with large inflow of volume as a confirmation for support (you may use time & sales to check if it is buy up or sell down)

For it to turn into uptrend, Uni-Asia has to close above 0.78 along with signs of strong support to be created at that level (i.e. large volume along with strong buy ins from market depth).

 

 

Updates on Gold

Referring to our article last week, Interest rate cut has happened where Gold has reacted positively to the news. Gold are on track for the upward momentum as mentioned in last week’s article.

 

 

USD Index

USD had failed to rally above 98.2 resistance line and resumed with the immediate downtrend where next level support would be around 96 levels.

 

Stay safe, stay alert and NEVER over trade in any circumstances. Lets learn and enjoy the journey together!

 

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Regards,

Ernest Koh

InvestWhizz Founder