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Saturday, 7 July 2012

Cash - Closing Status 6 Jul

New Toyo
Managed to clear off the remaining New Toyo 4 lots under Cash portfolio this week.  As mentioned in previous posting that l am expecting the rejuvenated new management team able to bring in more revenue and profit to the company which will further solidify its cash flow (and balance sheet).  Looking at investing into New Toyo when it price is attractive again.

HTL International
Invested into HTL 3 lots in mid April.  1st quarter results which was released in May was rather disappointing and scary.  Yes, its revenue catapulted 24.2% in 1st quarter but dangers which lurk in every aspects of its businesses are indeed a very serious concern :-

1.Its biggest sales at 49% is in Europe and everyone are well aware that this region is in chaotic condition now and there are many other important priorities in life than owning a luxury sofa.

2.Sofa business is at 94% of its core businesses and it is facing rising material and production costs.  GP margin from dropped from 35.3% to 33.4%. These cost pressures have outpaced  product selling price adjustments to customers.

3.Net borrowings increased by 31% or US$16.4 million due to more working capital required to fund higher production to meet increased in sales demand.

4.Negative FCF of US$15.7m in Q1 2012 as compared to a positive US$4.0 million in Q1 2011.

With the above bad news and other negatives, l reckon HTL will face extreme difficult times ahead.  l have been in the sell queue for almost 1.5 months and have finally managed to divest the entire 3 lots at par (minimal gain $5) this week. 

Portfolio walk since previous posting :-

-$496 Total Returns as of 29 Jun 

+$46 Profits on sales of HTL and New Toyo

-$119 Unrealised positions worsened

-$569 Total Returns as of 6 Jul

 previous posting :- Cash - Closing Status 29 Jun 

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