ASTINO (7162) - How to "Bonescythe" into Astino
Today Astino saw some movement with improved volume after realizing that this company had been trading at a very attractive value. Actually, at the current price of RM 0.735, Astino is still deemed as undervalue based on it's earning, company fundamental and management as well as NTA.
Before I would start digging into Astino, I would like to side track you a little bit to talk about my pseudonym name - BoneScythe. Actually, quite a handful of people who come to know me in real life for the first time will always never fail to ask me this question - "Why you are called BoneScythe ?". This somehow is a very tricky question to answer for me, because I do not really know how I came towards this nickname as well. As an avid gamer since my younger days, I always use this nickname in any game I played, because I think this is a cool name. Now I am a grown up, I am using this nick in the share market as well.
Basically, Bone is - (bone / tulang / 骨), and Scythe is a kind of knife. If I am going to put it into the context of share market, that will translate into digging out information until the deepest core of the body, which is the bones. Sometimes I wonder, what a coincident with my analysis in share market, where I like to dig deep into the bones of the company.
So coming back to the topic again. Yesterday, I had talked about Astino (If Astino is not your taste, then there is nothing left for you) based on it's earnings (FA related) and chart break out (TA related). To me, these are very surface information. If I am always talking about a stock based on this kind of analysis, you can call me SkinScythe, or FatScythe, because the kind of analysis is very surface and shallow, which is akin to the Skin of your body, or slightly underneath your skin, which is the fats level. So in order to know more, we need to dig deeper into the company, such as looking at the company properties and asset, and determine their value through geographical location and make prediction on the company growth expansion.
As for Astino, on a surface, this company is dealing with steel related building products. But if I "BoneScythe" this company deeper into it's properties and asset, let's see what we have here.
According to news reported quoted from The Star, Astino have a collective of 60 acres land bank in Nibong Tebal. In 2015, the group had identify the land bank to be utilized for industrial property development (Source - The Star 2015), and in 2016, the group is already on action stage with architecture plans being draw up (Source - The Star 2016)
Wow, 60 acres. What does 60 acres means to you ? Since most of us are very familiar with square feet, I will convert 60 acres to square feet, which is 2,613,600 square feet. A typical apartment unit of 3 room 2 bathroom is just around 850 to 1000 square feet, so we are talking more than 2600 units of those in floor area. So is this a lot ah? You do the maths la.
So in order to determine the current value, I did some search online through property sites like property guru and iProperty. So according to Property Guru, a good location residential land will be looking to sell at RM 35 per square feet.
Since Astino land are a little bit scattered around Nibong Tebal, I will assume it carrying an average of RM 45 per square feet after land conversion to industrial status. After all, it is freehold, very near to sea (ports) and the second link bridge of Penang.
So calculating back, this will mean that the collective 60 acres of vacant land in Nibong Tebal are looking at a collective value of RM 117,612,000.00. Of course, this is just an "agak-agak" value la. Now I go and add back all the book value of the "vacant land" at the Seberang Perai Selatan and Seberang Perai Tengah area, and come to a total of RM 62,306,210.00. Hmm, now this is a little bit interesting. So, there is a RM 55.3 million differential, which can be potentially contribute to the earning of Astino when revalued ? Waw, that can be a one off contribution of 20 cents to the EPS of Astino if done. (Based on 274.117 million share outstanding)
According to familiar sources, Astino is looking to use some of the land for it's own new factory in order to manufacture new building material to cater for new market. As for some other larger parcel, Astino will then develop and sell it as an industrial factory.
At the current state of the company cash and balance sheet, I think it is very appropriate for Astino to go into a corporate exercise involving right issue and free warrants for the fund raising activities. This will then not stressed the company financial too much during the current state of economy, and the company will also be able to continue dividend payment to it's shareholder while not diluting the shareholding of investor by issuing warrants.
Honestly, I think Astino is a good company. However, after projecting it's expansion and potential future movement in the corporate level, now sitting at the current price, I have no qualms. Now we are talking about Astino at the price of RM 0.74 which is
- trading below PER x 7
- NTA RM 1.14 (Price now is 35% discount)
- Revaluation reserve of RM 55.3 million (Freehold land, so value will keep increase)
- New expansion of factory, spurring potential corporate exercise
Now dear readers, with all this numbers and projection out, I have to tell you that you better not hesitate too long again. Although it might take sometime to see things rolling out 1 by 1 in the corporate level, but once it starts rolling, it will not stop by for you anymore.
ASTINO (7162) - How to "Bonescythe" into Astino
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