Introduction:
IFS Capital Limited (“IFS”), as a regional Group provides commercial finance services like factoring, hire-purchase/leasing, loans, government-assisted schemes and trade/export finance, to small and medium sized enterprises (“SMEs”).
The Group also provides bonds and guarantees, credit insurance and general insurance through its wholly-owned subsidiary, ECICS Limited.
Recent Development:
1) Will be place on watchlist if market cap is below $40 million & making 3 yearrs of consecutive losses. Has proposed rights issue at 3 rights for every 2 shares at $0.22. Upon completion of rights issue, share capital will be increase to 375 million shares from 150 million shares.
Assuming a share price of $0.22, thats a market cap of S$82.5 million.
2) Have been providing provisions for loans and impairment on investments in the last few years, resulting in losses. Investors should note that IFS is operational profitable.
3) Its 34% ownd Thai subsidery is profitable, which is one of the key contributor to its earnings.
4) Rights issue is non-underwritten. Philips Asset will subscribe for all the unsubscribed rights during this exercise. This might result in an increase in stake from 40% to 76%.
My Opinion:
1) The primary objective of the company now is to get out of watchlist. With the rights issue coming up, IFS will exit the watchlist.
2) Whats up with the S$49 million raised from the rights? The easiest way to boost its earnings is to privatise its thai listed subsidery. The market cap of IFS capital PCL is S$49 million at B$2.62. My guess is that IFS will take its thai arm private.
3) Short term pain for long term gain. Given that the last 3 years of losses by providing provision & impairment, IFS looks like it is taking the painful step of doing a major impairment & writeoff in FY2016, so as to start tFY2017 profitable. In the latest announcement, IFS will be registering a loss for its 3rd FY2016, due to allownance for loan losses & impairments.
4) After the rights issue, IFS will have $48 million in cash & cash equivalents as report on 1HFY2016, + $49 million from rights issue, bringing its cash to S$97 million or S$0.25 after the enlarged share capital. Including its listed thai subsidery, its cash($0.25) + listed subsidery($0.044 ) will worth $0.294.
My guess is $0.29 is a fair value to look at ...
IFS Capital Limited (“IFS”), as a regional Group provides commercial finance services like factoring, hire-purchase/leasing, loans, government-assisted schemes and trade/export finance, to small and medium sized enterprises (“SMEs”).
The Group also provides bonds and guarantees, credit insurance and general insurance through its wholly-owned subsidiary, ECICS Limited.
Recent Development:
1) Will be place on watchlist if market cap is below $40 million & making 3 yearrs of consecutive losses. Has proposed rights issue at 3 rights for every 2 shares at $0.22. Upon completion of rights issue, share capital will be increase to 375 million shares from 150 million shares.
Assuming a share price of $0.22, thats a market cap of S$82.5 million.
2) Have been providing provisions for loans and impairment on investments in the last few years, resulting in losses. Investors should note that IFS is operational profitable.
3) Its 34% ownd Thai subsidery is profitable, which is one of the key contributor to its earnings.
4) Rights issue is non-underwritten. Philips Asset will subscribe for all the unsubscribed rights during this exercise. This might result in an increase in stake from 40% to 76%.
My Opinion:
1) The primary objective of the company now is to get out of watchlist. With the rights issue coming up, IFS will exit the watchlist.
2) Whats up with the S$49 million raised from the rights? The easiest way to boost its earnings is to privatise its thai listed subsidery. The market cap of IFS capital PCL is S$49 million at B$2.62. My guess is that IFS will take its thai arm private.
3) Short term pain for long term gain. Given that the last 3 years of losses by providing provision & impairment, IFS looks like it is taking the painful step of doing a major impairment & writeoff in FY2016, so as to start tFY2017 profitable. In the latest announcement, IFS will be registering a loss for its 3rd FY2016, due to allownance for loan losses & impairments.
4) After the rights issue, IFS will have $48 million in cash & cash equivalents as report on 1HFY2016, + $49 million from rights issue, bringing its cash to S$97 million or S$0.25 after the enlarged share capital. Including its listed thai subsidery, its cash($0.25) + listed subsidery($0.044 ) will worth $0.294.
My guess is $0.29 is a fair value to look at ...
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