Friday, February 1, 2013

AEM Holdings

AEM Holdings: +3.5%, Breaking out from its recent Cap at $0.087. Note that NRA's Kevin Scully recommended this stock as one of his top 3 Picks, in the Value Investing Summit 2013 this week. Small-Mid Cap Strategy by NRA Capital – Kevin Scully: NRA recently made its investor’s presentation at the Value Investing Summit, where house recommended its key ideas. Recommend investors look for: 1) Investment must show immediate value (price to book <1) 2) You must pay me to wait as there is an opportunity cost to holding the stock – should have running divyield 3) Have sufficient liquidity – must have trading liquidity to reduce exit costs 4) Have a definable catalyst event and exit price –investment horizon shorter than WB’s 20 years 5) Should offer huge upside – one or two bagger. House top picks are Jaya, Midas and AEM. - Jaya: 2012 loan restructured and grp can now pay dividends and is in a net cash position, and its chartering business seeing a nice cyclical rebound as regional exploration activities pick-up. - Midas: China has just announced in Jan13 an increased budget for railways in 2013 to RMB630b from RMB400b in 2012. Midas has been surviving on municipal rail contracts since the Shanghai accident. It's one of two manufacturers of the train carriages so should be a major beneficiary when rail contracts resume. A major high speed contract should see the share rerate to their old highs. - AEM Holdings: AEM at $0.08 is now trading at 0.5x price to book. Its net cash is about $43m vs mkt cap of $35mn – so its trading below cash. Its main business is in the semi-conductor sector and it only has two customers. An earnings recovery 2H13 should see the shares first rerate to its NAV $0.16. Its next target would be earnings driven.

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