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The projects are expected to be funded using a combination of internal resources
and bank borrowings. “The projects expansion is
expected to be completed by the
end of 2010 and will contribute positively to our revenue for the financial year ending
30 June 2011” as stated by Dr Ge Hailin, CEO of Memstar.
31 March 11, Memstar’s 3rd quarter results show that non-current assets TOT receivables includes $225,584,000RMB, out of the total $349,214,000RMB. TOT receivables make up 64.5% of the total non-current assets.
Share price at that point hit a low price of $0.050 a share.
The first sign a company is doing well when they own patent rights to their products to ensure that they protect it from being duplicated by other company. The group also owned patent rights to their products amounting to $1355,000RMB. The ability of the group to protect their products in the market allows the group to increase the value worth of the brand.
Subsequently, due to the high TOT receivables shown in their 3rd quarter results, their final results for 2011 shows a high revenue increase of 194.4% for their last quarter, giving them a 158.7% increase in profits for the year as compared to last year. Their TOT receivables remain higher at $239,870,000RMB. There their next first quarter earnings are expected to maintain as increase in profits.
Finally, on 25 Oct 11, Memstar Inks OEM Supply Agreement with Hydranautics, subsidiary of
Japan’s leading diversified materials manufacturer. Under the terms of the agreement, Memstar will provide high performance hollow fibre membrane products to Hydranautics. The development and manufacture of the membranes will take place at Memstar’s facilities in Singapore, Guangzhou and Mianyang City, China. Hydranautics is a global leader in membrane technology, thus provide a good opportunity for Memstar to prove themselves as a leading provider of hollow fiber membrane in the water treatment sector.
Dividend Yield
Dividend yield still remained unattractive at 0.65%.
PE Ratio
PE ratio stays at 23, in which in my opinion is not undervalued yet. A PE ratio of less than 10 would be fairly undervalued. But of cause, there as much more clauses to be factored into consideration for an undervalued stock.
Earnings Yield
After their release of their full financial report for the year of 2011, their Earnings Per Share(EPS) went up to $0.00305 from $0.00182 a share, an significant increase of 167%.
Net Asset Value
The net asset value of Memstar is at $0.055 of the current share price. Meaning if you buy
the share at its current price of $0.072, you are actually owning 76.39% of its assets.
Conclusion
Despite a significant increase in earnings for Memstar, its Price to Earnings(P/E) ratio proves the current price of the share severely overvalued. Dividend yield for now still remains very low and thus might not be a good choice for investors going for long term dividend yields. It is possible that dividend yields may go up next year if their company maintain its consistency in net profits.
My max target price to enter would be $0.03.
Notes
The Group has concession arrangements with the government of the People’s Republic of China (the “grantor”) to operate wastewater treatment plants. Under the terms of the concession arrangement, the Group will modify and operate the treatment plants for concession period of up till 25 years and transfer the plants to the grantors at the end of the concession period at no residual value.
About Memstar
Main board listed Memstar Technology Ltd is a Singapore home grown PVDF hollow fibre
membrane and membrane product manufacturer. Its ultrafiltration (UF) and microfiltration (MF)
membrane products have been used in water treatment, wastewater treatment and material
separation.
Memstar has two manufacturing facilities in Guangzhou City and Mianyang City respectively.
Its headquarter and R&D centre is located in Singapore.
Published on 5 Feb 2012
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