The following notes on China Animal Healthcare and Jaya Holdings were written by Kevin Scully, executive chairman of NRA Capital, and were recently posted on his blog. They are reproduced here with permission.
Feb 9: AFTER ANNOUNCING that it has entered into a sales and purchase agreement to purchase Beijing JianXiang Hemu yesterday, China Animal Healthcare released a very good set of results for FY2009 last night.
Full year revenue rose 13.8% to RMB438mn while net profit was higher by 14.8% to RMB163mn in line with my range of RMB155mn to 165mn.
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What is more important is the Q4-2009 figure, which saw revenue higher by 36% to RMB132.5mn and net profit higher by 44% to RMB50.5mn.
Just annualising the Q4-2009 figure alone will give a net profit figure of about RMB200mn for 2010 but this doesn’t include its new acquisitions.
This suggests that profit forecasts of RMB250-300mn for FY2010 are reasonable if the new acquisitions can be completed smoothly.
I continue to like the stock but will let our analyst analyse the results in more detail.
For me the events of the last two days validate its inclusion into my stock pick/model portfolio, ie one step closer to completing one of two acquisitions and a strong set of results for FY2009 which makes the strong forecasts for 2010 believable and achievable.
There is however no dividend for 2009 as the company is retaining its profit and cash from recent placements to finance its new acquisitions and for increased working capital requirements.
The recent weakness in the share price from its high of about 30 cents provides good buying opportunity for investors who missed out earlier.
Recent NextInsight story: ZIWO, CHINA ANIMAL HEALTHCARE: What analysts now say....
Jaya Holdings - Q2-2010 results briefing takeaways......debt restructuring better than expected !!......doing more work but definitely worth keeping on the radar screen
Feb 10: In my February 1, 2010 blog, I talked about Jaya Holdings being interesting after the Courts approved its debt restructuring plan. But no details were available then and I was worried about possible dilution from debt capitalisation.
The company revealed details of the debt restructuring last night at an analysts briefing attended by one of our analysts.
The debt restructuring plan is very attractive and good for Jaya shareholders. S$362mn of existing borrowings will be converted into a 5 year secured note in US$.
No principal repayment for the first 2 years and repayments of S$66mn in 2012, S$85mn in 2013 and S$211.6mn in 2014. Interest is 2.5% above Libor.
There are some dividend restrictions but the conditions were not disclosed.
This deal means no dilution of the company's existing share base from debt capitalisation and also an orderly repayment of the debt.
The Q2-2010 results were good, revenue was up 172% to S$102.7mn with net profit of S$35.3mn higher by 32% from the same quarter in 2009. For the six months, net profit was S$67.8mn up 89%.
A significant portion of the growth came from interest savings and vessel sales.
Utilisation rate is low at about 50% with the company anticipating and experiencing an upturn in business so it has sufficient capacity to meet any pick-up in demand.
I will let our analyst look at it over the CNY holidays but the stock is definitely worth keeping on the radar screen now the details of the debt restructuring have been revealed.
