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TMFHumbleServant (92.89)

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May 18, 2010 – Comments (2) | RELATED TICKERS: RRI.DL2 , DLIAQ , NTP

Everyone,

What do you get when you cross me with some video capture software? My first video blog!

Click on the video below to walk through a short presentation I made outlining 3 stocks that grabbed my attention as I trolled along the bottom for ideas.

Be sure to let me know what you think of the format and stayed tuned for the in-depth research on the 3 ideas. And I guess you can make comments about the 3 companies, too. ;-)

Fool on!

Dave

Disclosure: Nam Tai is a Global Gains recommendation 

 

2 Comments – Post Your Own

#1) On June 18, 2010 at 3:33 PM, Zaneyjaney (< 20) wrote:

Sorry -- can't view it.  Please try again!

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#2) On July 15, 2010 at 3:15 PM, marvman0 (< 20) wrote:

NTE - Interesting posts from From Yahoo msg Board:

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Nam Tai - Koo's Plaything 15-Jul-10 11:39 am

Do not like the portrait of Koo that emerges:

Koo Founder and key management continuity - looks like everyone else churns.

Koo giving himself (he is board Chairman) $1.2 million (incl apartment) a year to be CFO + perks (including golf course membership - what companies are still giving these type of perks)regardless of company performance and well above comparable CFOs - is this a company belt tightening?

Moves AGM were fun/convenient for him - 2009 to Vancouver Canada, know of any other NYSE company that has their AGM here(Koo's previous and maybe current residence), 2010 California - were he buys Napa wine (do you believe this guy paid $200k for a 6L bottle of screaming eagle). Is the AGM not for the benefit of investors and should be held were best for them?

Has Fun launching law suits and exercising his law degree thru Nam Tai(suing BofChina, UBS, PW, SSA, even previous employees).

Described as smart and huge Rolodex by some scary crazy senile by others.

What a portrait - we are relying on this guy to turn this company around!

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Koo dumped half million shares between 2008 and now 15-Jul-10 01:04 am

Koo has dumped half a million shares over the period of Nam Tai's business decline from 2008 to 2010 (I think mostly between 2008 and 2009) I guess he somewhat new the storm was coming.

From 5720K shares in 2008 to 5,224K shares in 2010 - source proxy circulars.

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Ready to DUMP this LOSER!!!!! 8-Jul-10 01:13 pm

Additional info for your consumption:

Lets say the company drives EBITDA of 4% of sales of annual $400M. This would be $16M x 11x multiple is $176M / 44.8M shares = about $4 stock price...roughly were it is. SO NAM TAI IS GETTING CREDIT IN ITS CURRENT VALUATION OF 4% EBITDA and at a 11x mutiple. It still has to do a lot of work to get to this profit level and a 11x multiple is very generous.

So for the stock price to go up it has to get to 4% EBITDA and grow revenue significantly. The former is doable with hard work. To do better on margin is remotely possible. To grow top line will be very difficult and if done will take years (Sales cycle in EMS I think about 18 mths).

There must be better options out there. Opportunity cost of ownership is VERY HIGH.

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POSITIVE NEWS VERY UNLIKELY 11-Jun-10 03:29 pm

I thought it worth while to re-post my analysis of Nam Tai which comes out as VERY NEGATIVE. I have tried to be objective, however, I would be very pleased to hear from anyone that has a positive business reason to invest in Nam Tai or point out something that I have missed:

The negatives-

Total Lack of Transparency - no quarterly conf calls (since YE 2008), no active IR activity, no analysts covering, AGM moved out of the US, no ability to ask mgmt questions directly. Beyond me how a NYSE board could allow this!

Management Exodus (no competent management left to speak of...):

2007 CEO lasted 6 mths - Warren Lee

NA great CFO left end of 2008 - John Farina

Japanese well connected New CEO left beginning 2009 - Yasukawa

COO left end of 2009 - LP Wang

New CEO (previous division CEO) left beginning 2010 (after 20 years w/ Co.) - Karene Wong

Many others...acting CFO Anthony Chan, entire Legal Team, corp secretaries etc etc

We are left w/ founder Koo +65 years old (Chairman, CFO, chief cook and bottle washer) calling all the shots.

Deteriorating (significantly) top and bottom line WHEN ALL COMPETITORS POSTING BIG POSITIVE NUMBERS!

In a very competitive industry - EMS and clearly one of the smaller players (Nam Tai had dropped from top 15 EMS to now not even 30th; of top five EMS number 1 is approx. over 100x and number 5 over 15x larger. Economies of scale, size (mfg & buying power), global customer solutions matter!

No competitive advantage...the days when china cheap labor is an advantage are gone. All the major players are there and many moving to lower cost areas in Asia like Vietnam. Besides labor rates in China are increasing dramatically and also by 2012 tax rates will effective at least double (refer to Hon Hai's (Foxconn) issues in Shenzhen with many suicides having to raise labor rates and pass pricing increases to customers and moving production to Tiawan).

Nam Tai FPC (where mainly applied to mobile market with Japanese technology) could falter significantly with other Asia tech taking over like the Koreans. Besides, Nam Tai has a deteriorating relationship with its Japanese customers (which I think are close to 75% or higher of the current revenue). (I am sure the X Japanese CEO who left in 2008 and is very well connected - his father is x chairman of Epson - is not singing Nam Tai's praise)

LCD in the form factors and non touch that Nam Tai is in is not a winner.

Both FPC / LCD have been low margins for the company and do not see how they will improve. Nam Tai has already maximized austerity measures e.g. 30% wage cuts for all staff and turfed anyone they could.

Very disturbing is the disappearance of the company's Consumer business which has historically grown very well and had very high profit (company says getting out because low margins...this is a very curious statement...how did it go from very high to very low????? - how did this go to nothing????? Very Scary

Expanding into capital intensive Flexible Printed Circuits w/ NIL previous experience...believe Wuxi Factory largely empty after significant investment (how does company destroy previous lucrative consumer business and invest here?????).

The Positives-

Very strong cash position with no debt.

Stock currently trading at close to cash value so one may spouse limited down side

This is the analysis which leads me to being a strong sell.

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