Post Reply
1-1 of 1
Ellipsiz is the second stock which I want to add to my stock pick list......
04 June 2009 18:10
Posted by Kevin Scully
I copied from Sharejunction's homepage. First time reading home page..haha.. Yesterday, Business Times also had an article about stay defensive and miss opportunity ..
Was out most of the day at meetings and didnt get a chance to discuss the second stock that I want to add to my stock pick list this week.
I first started looking at Ellipsiz in January/February 2009 when the share was between 2.5 and 3 cents. It was unfortunate for me that I didnt do anything about it then and the share closed today at about 11 cents. The reason for my inaction was that I happened to be playing golf with some former staff of Ellipsiz in January in a Charity golf tournament. They told me that the calendar Q1-2009 results were bad and that business was also very difficult. I decided to wait for their Q3-2009 results which is also calendar Q1-2009. The results were terrible on the surface and I commented about this in my Blog of May 15, 2009.
Being a careful person especially when we have so many instances of corporate fraud among our listed companies, I wanted to meet management and talk about their Q3-2009 numbers and the outlook before making any decision. We finally had our meeting in the middle of this week. The good news is that their Q4-2009 or calendar Q2-2009 will be slightly better than their Q3-2009 but its still likely be to red ink but probably less red ink than Q3-2009. The next piece of good news to me was that they provided fully for the building which caught fire of about $12mn - there is a possibility of recovering some of this if their insurance claim is successful. This could improve their NTA which fell from 40.5 cents to 16.5 cents. The underlying value seems to be the strength of their balance sheet which shows a cash position of about $34mn and net cash of about $19mn or 4 cents per share. This should help them ride out this difficult down turn. They confirmed that in the Probe card business they are now number 4 in the world from number 5 before because someone above them went bust.
The bad news is that the semi-con equipment side is still soft but the consumabes has seen a pick-up.
The chart below shows where this share has been and even though its up from a low of 2.5 cents.....its still a long way from where it has been. I think the downside from these levels is limited especially if we see an improvement in quarterly performance in the coming months. But when the green shoots really start to sprout - the semicon sector will be the one to show very strong growth when compared to its ems counter-parts. Well worth looking at in terms of risk reward and to me could also double on a 12 month view if the green shoots dont become brown weeds. I am therefore adding it to be stock pick list - "better to be sure and correct than early and wrong" is my philiosphy here in that at least I know the fundamental reason why I am recommending the stock - dont ask me about momentum.
I have one other concern - the shareholding structure which shows the Chairman and CEO jointly owning just over 20% of the company. This is okay if we have other strong groups of strategic shareholders but I would prefer the management and founders to own more than 30%.
04 June 2009 18:10
Posted by Kevin Scully
I copied from Sharejunction's homepage. First time reading home page..haha.. Yesterday, Business Times also had an article about stay defensive and miss opportunity ..
Was out most of the day at meetings and didnt get a chance to discuss the second stock that I want to add to my stock pick list this week.
I first started looking at Ellipsiz in January/February 2009 when the share was between 2.5 and 3 cents. It was unfortunate for me that I didnt do anything about it then and the share closed today at about 11 cents. The reason for my inaction was that I happened to be playing golf with some former staff of Ellipsiz in January in a Charity golf tournament. They told me that the calendar Q1-2009 results were bad and that business was also very difficult. I decided to wait for their Q3-2009 results which is also calendar Q1-2009. The results were terrible on the surface and I commented about this in my Blog of May 15, 2009.
Being a careful person especially when we have so many instances of corporate fraud among our listed companies, I wanted to meet management and talk about their Q3-2009 numbers and the outlook before making any decision. We finally had our meeting in the middle of this week. The good news is that their Q4-2009 or calendar Q2-2009 will be slightly better than their Q3-2009 but its still likely be to red ink but probably less red ink than Q3-2009. The next piece of good news to me was that they provided fully for the building which caught fire of about $12mn - there is a possibility of recovering some of this if their insurance claim is successful. This could improve their NTA which fell from 40.5 cents to 16.5 cents. The underlying value seems to be the strength of their balance sheet which shows a cash position of about $34mn and net cash of about $19mn or 4 cents per share. This should help them ride out this difficult down turn. They confirmed that in the Probe card business they are now number 4 in the world from number 5 before because someone above them went bust.
The bad news is that the semi-con equipment side is still soft but the consumabes has seen a pick-up.
The chart below shows where this share has been and even though its up from a low of 2.5 cents.....its still a long way from where it has been. I think the downside from these levels is limited especially if we see an improvement in quarterly performance in the coming months. But when the green shoots really start to sprout - the semicon sector will be the one to show very strong growth when compared to its ems counter-parts. Well worth looking at in terms of risk reward and to me could also double on a 12 month view if the green shoots dont become brown weeds. I am therefore adding it to be stock pick list - "better to be sure and correct than early and wrong" is my philiosphy here in that at least I know the fundamental reason why I am recommending the stock - dont ask me about momentum.
I have one other concern - the shareholding structure which shows the Chairman and CEO jointly owning just over 20% of the company. This is okay if we have other strong groups of strategic shareholders but I would prefer the management and founders to own more than 30%.