I was looking at this counter at the release of its 4Q09 financials yesterday (12 April 2010).
- Turnaround story,
- HK's leading free newspaper publisher for Headline Daily (circulation 760k / day), The standard (circulation 200k / day) and Sing Tao Daily. This versus competitors for free newspapers AM 370 and Metro circulation of approx 200k+/day each.
- Also publishes several popular HK magazines including East week, PC Market, East Touch, JET, Spiral, CAZ buyer and Job market.
Financials
- Mkt cap of HK 900m, has approx HK 413m in cash and short term securities
- Firm historically loses money in publishing and makes it up with gains in investments although operating losses are common in firms operating in free newspaper publishing (ex AM370 and Metroline Daily)
- In 2007, investments were HK 366m which declined to a mere 41m in 2008
- Financials very messy but if one digs further, one will realize operating profit is never positive except for 2007 and 2009 (notes - years with high ADEX, very bullish years in other words)
- Equity book growth is at 8% CAGR with no operating free cash flow to speak of
Thoughts
- The position is interesting but not at price of HK1.09, neither safe or cheap
- A spin off as catalyst in this case is not attractive reason being do you think Sing Tao will spin off 100% of its core business? I think even a 70% issue of stake will be unlikely
- Further, the firm as a whole churns out HK 63m of operating earnings per year, I think
- Too big a risk to bet on management's ability to be great investors
- Subsequently price is now at HK 1.37, up 18% today and 6% the day before
The market actions seem to suggest that the market knew something I did not know.
Anyone has comments please feel free to write it here.
1 comments:
The news is on.
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