Monday, July 4, 2016

CMPH & SilverLake Axis


I have recently received the cash  for the unconditional GO offer at $1.02/shr for a total of 21550 shares.It was  a good investment for me at I purchased at an average price of around 60 cents/shr excluding dividends. All in all, I held these shares for an average period of 5 years.I stumbled upon CMPH by chance 5 years ago after reading some comments from some forumers.

I have since then reinvested the amount into Silverlake Axis at an average price of 49.5 cents/shr.Why SilverLake Axis? when there are some attacks on its corporate practice relating RPT last year. Firstly, I think the business is still sound and price has come down to more realistic levels.The company do not carry a lot of debt and the business itself has a reasonably good moat for the time being unless fintech take on in  a very big way displacing traditional banks which I doubt.There is some upside as the company hold 27m shares in GIT which is listed in the Shenzhen stock exchange. GIT currently trade around 70 rmb/shr. Silverlake is entitled to sell 8m GIT shares from 24 June 16 onwards. Silverlake do give regular dividends and the value of ringgit is unlikely to depreciate sharply against the $S from the current ratio of 3:1.Lastly, the company has been doing a lot of buybacks which at least indicate to me that the management is willing to spent cash on its own shares in a big way.

The P/B ratio of around 7 doesn't look attractive but I think I prefer to look at its earning generative ability also. Commodities companies can carry a lot of assets but if these assets cannot generate regular earnings, they will depreciate and be written away pretty fast.Just look at Oceanus to see how pitiful things can get.I was lucky to exit it years ago from this speculative foray with a small loss after I noticed the PRC CEO did not even bother to turn up for the AGM but keep selling his shares in the market.

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