When we wrote about Nobel Design way back in 21 April 2017, the article spoke about its cash level and why we liked that stock. In short, we spotted great value in it – there was so much value in the stock that we had to write about it!
True enough, Nobel Design received an offer on 2 May 2017 to take the company private!
While the offer price was below its cash value of $0.58 per share, readers and investors who took note of our article would have bought the shares at $0.455 or thereabouts. That is still great value for such a short time frame, isn’t it?
Value investing is a way of investing espoused by investment greats such as Benjamin Graham and Warren Buffett. To these legends, one needs to follow a certain set of criteria in identifying such stocks! Before even we decide to invest, it is very important to get the basics right; all tall buildings need a solid foundation.
We have learned from these great people and we wish to share with our readers on the proper way to invest in the stock market as opposed to investing without a methodology.
If you are interested in learning more about how to spot value stocks, come listen to proponents of value investing! This is a FREE event on 21 October 2018 from 9am to 4pm! Limited seats are available so register with us as early as possible to avoid disappointment. Oh, and there is really such a thing as Free Lunch as food and drinks will be provided.
Email us at http://www.sharesinv.com/contactus.php and give us your name, contact number and email address. But do remember that each participant can only register for one seat, not two, not three or more, ok?
SI Research: Nobel Design
In times of great uncertainties and volatilities, investors tend to have a stronger preference for companies with large cash holdings in their balance sheets. Because cash is the most liquid form of assets available, it can immediately be utilised for business activities ranging from settling monthly expenses to business expansion. In essence, cash does not only provide a company with the necessary resources to pay off its debts when required but at the same time allows it the flexibility to embark on short-term investment opportunities or acquisitions.
On that note, strong cash flow or large cash holdings are often cited as a critical factor for the long-term success of businesses. As the often-quoted saying “Cash is King” so aptly points out, businesses without sufficient cash on hand or depend heavily on credit have higher chances of facing cash flow issues or may even be forced into bankruptcy. As such, we take a look at three companies with huge cash piles.
Nobel Design Holdings – $0.60 Cash, Priced At $0.45
Nobel Design Holdings (Nobel Design) is a renowned furniture retailer mainly involved in the distribution and retailing of design furniture and fine imported European home furnishings, provision of interior design services for homes and commercial projects, as well as engaging in supply chain management bringing contemporary and classical furniture to major retailers in the United States of America (USA). The group has business operations primarily in Singapore, USA, Malaysia and Brunei. Nobel Design’s core businesses are broadly classified into two business segments, namely its interior and furniture segment and also its supply chain segment. From the group’s latest FY16 results, the former contributed 36.9 percent while the latter contributed 63.1 percent towards its FY16 total sales respectively.
From Nobel Design’s FY16 results, we also understand that the group’s revenue climbed 9.4 percent to $92.6 million, mainly attributable to improved sales of 18.4 percent in its supply chain division selling to the US market. However, this is offset by lower recorded sales within its interior and furniture segment in line with the slow-down in Singapore’s residential property market segment. Overall net profit dropped by 5.1 percent to $17.2 million primarily because of the start-up losses from newly opened Ibis Styles Hotel at Macpherson, the loss of rental from an anchor tenant at Tai Seng, as well as impairment provision for the UK development site.
Although Nobel Design’s profitability seems less than impressive, we are particularly excited about the group’s strong balance sheet. As at 31 December 2016, Nobel Design was holding a total of $134.8 million of cash and bank balances, with $9 million of borrowings and $87,000 of obligations under finance leases. This translates to a net cash position of $125.8 million, or equivalent to $0.58 per share. With Nobel Design’s last market price at $0.455 as of 10 April 2017, its current net cash as a percentage of share price stands at an irresistible level of 127.5 percent. In other words, you can literally get almost $1.30 of cash for every dollar of Nobel Design’s shares which you purchase.