Friday, August 17, 2012

Recent Stock Actions: Teckwah Industrial

Took up a small stake in Teckwah Industrial based on recommendation from a friend. Teckwah is a relatively low profile company with core business in print and logistics. The business fundamentals are fair and it's currently attractively priced. Teckwah is in the news recently for the print media hub at Paya Lebar. The print business of the company is fairly constant. The non-print or logistics segment is growing and gradually taking up a larger segment of the overall business. Some key points regarding the purchase is detailed below.

Positives
  • Strong balance sheet with low gearing of 2.78% and healthy cash position of $41.7 mil
  • Dividend yield of approximately 4.8%
  • Management is forward looking and investing in infrastructure to enhance its capabilities (eg. print media hub and investments in Iskandar Malaysia)
Negatives 
  • Print media business is price sensitive with increasing operating costs eroding the profits
  • Would want to see greater clarity on how management intends to grow the non-print business
Update: I have sold off my holdings in Teck Wah due to some initial miscalculations in the gearing ratio. 

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