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Allan International Up Almost 160% In Nine Months

On June 6th 2009, I suggested that all intelligent investors should buy into Allan International Holdings Ltd (HKEX 0684). The share price was HKD1.02, with a price to earnings ratio of 5.27 and a dividend of 8 cents or 7.84% return, making it the best value for money in the Hong Kong Stock Market at the time of writing.  I went on to state that the previous financial year’s dividend was 11 cents, representing a 10.78% return based on the current share price.  The company also had a history of adjusting dividends to match company performance and cash flow requirements.  The end of year financial results were expected to be strong so I was looking for an increase in dividend payments.

Warren Buffet and Benjamin Graham love this type of company with net asset value of HKD540,827,000 and market capitalization of  HKD342,141,170.  It represents buying a dollar at the value of 63.26 cents. The net profit was HKD 64,872,000 with earnings per share of HKD 0.1934  with dividends of 11 cents in 2007 and 8 cents in 2008.

On November 7th, with Allan International Trading at HKD1.72, I spoke of my expectation for an increase in the half-year dividend payments for the period to 31st September 2009. After an incredible performance by management, end of year results for the year ending 31 March 2009 showed great numbers -  the profit was up 65% (HK$64,872,000 to HK$106,938,000), cash on-hand doubled (HK$163,221,000 to HK$335,164,000) and debt almost halved ($33,194,000 to HK$19,755,000). The annual dividend increased from 10 cents to 14 cents per share, up 40%. Historically, management has been very generous in its sharing of company profits with shareholders. In 2007/8 the interim dividend was 4 cents with final dividend 6 cents while 2008/9 interim was 2 cents and final 12 cents.

I mentioned that management has a tendency to adjust dividend payment according to cash flow requirements and profitability. With cash on hand doubling to HK$335,164,000 and profit up 65% to HK$106,938,000, the company has a cash hoard that makes it the envy of all listed companies on the Hong Kong Stock Exchange.I correctly understood that the expected dividend would be influenced by a combination of the historical ratio of interim to final dividend, cash on hand, net profit and future investment requirements.  I expected the interim dividend would be up from 2 cents to 6 or 8 cents; it turned out being 5 cents. My summary of the stock still stands. Allan International Holdings Ltd is a very safe port for our money in these stormy economic times.

On December 4th my analysis of Allan International Holdings, a manufacture and seller of household electrical appliances, concluded that the current increase in share price to HKD1.99 plus the HKD0.12 dividend puts the return on investment at HKD1.09 or approximately 106%.  One million Hong Kong dollars invested in Allan would have grown to over two million in just six months. At that point I suggested that investors should sell half of the shares they have in Allan International Holdings. I was confident the fundamentals of Allan were excellent, though, with the present uncertainty in the markets, 106% profit over a six month period needs to be realized.  I advised that the other half of the funds an investor had remaining in Allan should be kept as a long term investment with the dividends keeping one warm at night during these turbulent times.

Well here we are and its now March 9th 2010 and Allan International is trading at HKD2.48, which is an increase of HKD1.46 with a dividend of 17 cents making a return of HKD1.63, or,  in other words, a 159.80% return on investment in a nine month period which is perfectly acceptable.

Marcus Maher, Chief Business Analyst – China

Note: Marcus Maher currently owns shares in Allan International Holdings, Ltd.

Remarks: Due to reporting and updating time-lag, readers and users should exercise caution when using the data presented in this analysis. Please see the Disclaimer and the Important Notes.



46 Comments for “Allan International Up Almost 160% In Nine Months”

  1. There I was preparing to buy some more when whoop, up she goes.
    Unbelievable. 3,46 when I checked this morning.
    Sooner or later someone is going to notice this company and make a serious run at it.
    i reckon we’ll be in doublr figures by 2012 if not sooner.

    • Vaughan

      It’s HKD3.60 now and the Bulls definitely have control of this stock. As the Dollar and Euro, are backed up by nothing more than lack of confidence and continue to look less inviting, companies such as Allan will become that safe port in a storm.

    • HKD3.64 today, what a wild couple of days.

  2. It’s been an interesting couple of weeks with everyones pet stock Allans dropping down to 2.85 at one point only to rebound quickly and settle at around the 3.03 mark for a week or so, then start bouncing up again, 3.20 today. This is a very interesting stock with seemingly only one direction in mind.
    Was I the only one to pick up a healthy dividend last month?

    • It seems that anyone intending to sell Allan for a tidy profit has sold it and most investors are keeping it as a long term investment.

      It was a very nice dividend, I enjoyed it very much, 18 cents per share was very generous. The half year dividend gets paid in or around January, somewhere between 7 cents and 9 cents is my expectation.

    • An interesting day for Allan shareholders with trading volume of 334,000 shares or about 0.1% of the companies shares changing hands. The share price started at HKD3.17 and went as high as HKD3.35 then settling down to HKD3.22 at the end of days trading.

    • Some photos I took at the 2010 Annual General Meeting of Allan International Holdings Ltd



  3. It was an interesting morning of trading in Allan International with just 128,000 shares being purchased and the share price moving from HKD2.94 to HKD3.03. A nine cent increase in the share price is quite sizable and translates into 3.06% increase for the morning.

  4. David Webb has finally crossed the 9% shareholding mark. Webbs increased shareholding is a statement of confidence in Allan International. It is highly likely he will continue increasing his shareholding until he has 10% which will allow him to have a greater say in Allan International. As Allan has half a billion in cash and Webb is a genius investor I’m sure he will have suggestions on how the half billion can be better utilized.

    http://sdinotice.hkex.com.hk/di/NSForm1.aspx?fn=40209&lang=EN&dia=Y < http://sdinotice.hkex.com.hk/di/NSForm1.aspx?fn=40209&lang=EN&dia=Y>

  5. only reading this now! must dust off and re-read my copy of the intelligent investor by Benjamin Graham again!! keep me posted of new finds.
    Steve

    • Silver is the next big thing, I recently started accumulating it in larger quantities. About one month ago it was USD18 per ounce its now USD19.50 which is up about 8% in a month. Silver is starting to roar.

  6. On the 18th of August 2010 I attended Allan International Holdings Ltd Annual General Meeting. It was a very pleasant event as management had done an extraordinary job increasing cash and profit in a very difficult business environment.

    My conclusions after attending the meeting are:

    a) David Webb will probably increase his shareholding to 10% which will allow him to have greater influence over the company. This is a good thing as management is receptive to anything that benefits the long term growth of the company.

    b) The board of directors will continue to making substantial dividend payments which will probably be about 50% of profit which is commendable and proof of integrity.

    c) There is a piece of land about 10,000 sqm in Huizhou which was one of Allan’s first factory’s. It was purchased about 25 years ago and then amortized so its value on the Balance Sheet is probably quite small. As land prices in that area of Huizhou are currently RMB2-3,000 per sqm and there are no plots this size available it is highly likely likely a smart property developer will want to build a residential/retail development on the location. Allan management are adamant they will not get involved in property development but they will do their best to get the best value for shareholders for the block of land. With a bit of luck the net assets in Allan will increase substantially as a result of management selling the land at a premium.

    d) Allan is increasing the quality of the products it manufactures so the profits margins will continue to improve which means continued large profits and large dividends.

    e) Allan is a BUY, David Webb is buying, the CFO is buying and so is the family trust that owns a majority stake in the company. Allan is a BUY.

  7. For those wondering what other major Hong Kong shareholdings David Webb owns:

    Preferable Situation Assets Limited Alco Holdings Ltd.
    Preferable Situation Assets Limited Allan International Holdings Ltd.
    Preferable Situation Assets Limited Sinotronics Holdings Ltd.
    Preferable Situation Assets Limited Sun Hing Vision Group Holdings Ltd.

  8. It is interesting to note David Webb who owns 8-9% of Allan International has increased his shareholding at a price of HKD2.92

    Preferable Situation Assets Limited 103(L) 238,000(L) HKD 2.992 23,530,000(L) 7.01(L) 21/07/2010

    Not to be outdone by David Webb Sophie the CFO of Allan International also purchased 500,000 more shares at a price of HKD2.80

    Cheung Lai See Sophie 121(L) 500,000(L) HKD 2.800 148,759,960(L) 44.35(L) 30/06/2010

  9. Allan International Holdings Ltd’s dividend pay out since July 2006 (Courtesy of one of Hong Kong most intelligent investors)
    2010/06/29 03/2010 Final D: HKD 0.18 2010/08/12-2010/08/18 2010/08/27 2010/08/10
    2009/12/17 03/2010 Interim D: HKD 0.05 2010/01/04-2010/01/06 2010/01/21 2009/12/29
    2009/07/08 03/2009 Final D: HKD 0.12 2009/08/13-2009/08/19 2009/09/01 2009/08/11
    2008/12/19 03/2009 Interim D: HKD 0.02 2009/01/05-2009/01/07 2009/02/06 2008/12/30
    2008/07/18 03/2008 Final D: HKD 0.06 2008/08/19-2008/08/25 2008/09/10 2008/08/15
    2007/12/13 03/2008 Interim D: HKD 0.04 2008/01/02-2008/01/04 2008/01/18 2007/12/27
    2007/07/18 03/2007 Final D: HKD 0.07 2007/08/16-2007/08/22 2007/09/05 2007/08/14
    2006/12/14 03/2007 Interim D: HKD 0.03 2007/01/03-2007/01/05 2007/01/15 2006/12/29
    2006/07/19 03/2006 Final D: HKD 0.06 2006/08/15-2006/08/18 2006/09/12 2006/08/11

  10. For those that were wondering why Allan International share price has dropped recently. One of Hong Kong’s most intelligent investors offered me the following explanation, “The stock trades “ex-dividend” from 10-Aug. Anyone who buys the stock on 10-Aug or later will not get the dividend – the seller will. Hence you would expect the price to drop by $0.18. Payment date is 27-Aug.

    This is standard practice. Stocks go ex-dividend 2 business days before the book close date.”

    I hope this clarifies a little know fact about purchasing shares for dividend purposes only and timing your share sales to receive the dividend and not get hit when the share price drops by a similar amount to the dividend that was paid.

    Personally, I buy and hold. Allan is the best value on the HKEX.

  11. whats the price now, is it worth buying? whats the minimum buy?

    • The company is getting to being fairly valued. If you are looking to double or triple your money that opportunity no longer exists. However, Allan pays excellent dividends so its a nice place to have some of your saving invested. Allan International has a cash hoard which is somewhere in the region of half a billion Hong Kong dollars, is this is invested intelligently the price will most probably move in the direction of four to five dollars per share.

      My suggestion for you is to wait until the Annual General Meeting where we may find out what their plan for their cash. The AGM is the 18th of August so it wont be a long wait.

    • Scott,

      Based on what I learned at the AGM, I will be adding to my shares in Allan. Allan is transforming from a small company to a medium sized company and its future is very very bright.

  12. Great share, bought in at HK$0.76, and again at HK$1.26, and it has given me a great return. A solid company, with good business and a lot of cash!

    • What is your average buy price, it must be about HKD1.00. With end of year dividend of HKD0.18 and half year dividend of HKD0.05 totaling HKD0.23 it must be about 20% plus dividend. Not bad.

  13. Wow. I got mine at 1,49. Marcus, stop wasting your life and start getting more of those deals. Shekou Buffet.

    • Vlad,

      Nice to know you did well out of Allan, 1.49 to 3:27 with additional 0.35 cents in dividends (as of 27th August 2010) is good for your daughters college tuition fund.

      Marcus

  14. Allans up to 3.23 today. Someone’s keen to have it.

    • I mentioned a few days ago that we may see the price go up to HKD3.50 before the AGM. If things continue like they have for the last couple of days it will definitely reach HKD3.50.

    • Hi All,

      Think about it…….. fund managers are catching on and retail investors know this is EASY $$$$ with a BIG dividend being paid in a matter of weeks!

      This is one of the BEST bets one can make in July 2010!!!! Truly a $4.00 – $5.00 value investment!!!!!

      P J

  15. Vaughan,

    I’m going to the AGM on the 18th of August in Hong Kong, if you are free come over from Zhuhai and meet the Board of Directors, they are great people. Also you can ask questions if you like, I’ll be asking what they are going to do with their half billion to increase the profitability of the company.

    • Folks,

      Allan has the basics for value investing, solid fundamentals!!! It has a long way to go with cash on hand and a competitive advantage…..

      PJ

      • We have about sixteen more days to buy Allan International and still be eligible for the dividend, the cut-off day is the 18th of August and its paid on the 27th. The real question is, what are they going to do with their half billion dollar cash hoard?

  16. I bought a chunk of Allans at $HKD2.26 in May. it’s at 3.10 as at this moment. That’s a nice little capital Gain,
    Thanks for the tip Marcus.
    They’ll be paying a dividend of .18c per share on the 27th of August to anyone who has the stock on the 18th.I’ll be rolling that right over thanks very much.
    I firmly believe this will go into double figures in the next few years.

    • Your comment that Allan will go into double figures is an interesting comment.

      The current PE is 5.52 which means market capitalization of HKD1,049,903,788 divided by profit of HKD189,608,000 equals 5.52. What isn’t factored in with a companies Price to Earnings ratio is cash minus debt. A company loaded up on debt is treated the same as a company with almost no debt and a half billion dollars of cash, they would have the same PE. Some analysts talk of TPE (True Price to Earnings Ratio) which if my understanding is correct is: Market Capitalization minus (Cash minus Debt) divided by Profit. So Market Capitalization HKD 1,049,903,788 minus (Cash HKD482,469,000 minus debt HKD8,279,000 = HKD474,411,000) is HKD575,492,788 divided by Profit HKD189,608,000 equals a True Price to Earnings Ratio of 3.03. Allan International now looks very cheap at a TPE of 3.03.

      As the Managing Director of Allan stated, the companies future increased profitability is dictated by commodity price. He expected commodity prices to go up, recently they seem to be going down. The companies share price is also linked to commodity prices in that they dictate profitability.

      I have always thought of Allan International as 3-5 dollar stock. For its share price to continue to increase Allan will need: to re-invest their cash hoard to increase profitability, cheap commodity prices and continue with their outstanding management of the company.

  17. The current stock price for Allan International is HKD3.05, it appears intelligent investors like Allan International (HKEX0684).

    Maybe it’s the Net Profit up 77%, from HK$106,938,000 to HK$189,608,000, it could even be the Group holding HK$482,469,000 in cash up from HK$335,164,000 or maybe its just the HKD0.18 final dividend, which when added together with the interim dividend of HKD0.05 totals HK0.23 cents per share.

    Intelligent Investors continue to buy Allan everyday, we can only expect the share price to continue rising up to the Annual General Meeting on the 18th. At the AGM, this shareholder of Allan International will continue to politely request that the Board of Directors find intelligent ways to invest their cash hoard of what must be close to half a billion dollars. If invested wisely this would enhance profitability.

    Disclosure: Marcus Maher currently owns shares in Allan International Holdings Ltd.

  18. Allan International Hits A Home Run

    Allan International smacked the ball out the park, with an increase in Net Profit during these turbulent times of 77%, from HK$106,938,000 in 2009 to HK$189,608,000 in the year ending March 31 2010.

    There are few listed companies that have a healthier Balance Sheet than Allan, the Group held HK$482,469,000 in cash up from HK$335,164,000, in the previous financial year.
    Total debt stands at HK$8,279,000 down from HK$19,755,000 with a gearing ratio of 1%.

    The final dividend was a staggering 18 cents, together with the interim dividend of 5 cents per share, paid in January this year, the total dividend will be HK23 cents per share. As last years total dividend was 14 cents Allan is becoming the safest investment on the Hong Kong stock market.

    On June 6th a year ago, I suggested purchasing Allan International at HKD1.02 describing it as, “the best value for money in the Hong Kong stock market”. Since then the share price has increased to HKD2.71 (at the time of writing this article). With dividends in the last twelve months of 12 cents, 5 cents and 18 cents totaling a remarkable 35 cents added to the HKD1.69 increase in share price, an initial investment of HKD1.02 would have turned into HKD3.06 as of today. This performance is a well deserved and remarkable effort on the part of management by Albert and Maggie Cheung and the management team of Allan International.

    I continue to own shares in Allan international and am happy that investors following my advice in buying at HKD1.02 would have tripled their money in the last 12 months with exactly 200% return on investment.

  19. Please note that David Webb, one of Hong Kong’s most famous investors, now owns 8.02% of Allan International Holdings Stock Code 0684. On the 29th of April 2010, Webb bought 80,000 shares at an average share price of HKD2.45. The current share price today is HKD2.28.

    Please note the link to FORM 1 – Individual Substantial Shareholder Notice
    http://sdinotice.hkex.com.hk/di/NSForm1.aspx?fn=37911&lang=EN&dia=Y

    • Marshall Taplits

      It certainly is an interesting company – what do you make of the recent market turmoil? Buy on a dip?

      • Allan International is one of those companies whose shares should be sold very reluctantly. It continues to increase sales, its profitability, cash on hand and its dividend. Warren Buffet talks of lumpy earnings and Allan International definitely has that. If you have money that you are looking to invest somewhere safe in these uncertain times then Allan International is one such place.

        The dividend will keep you warm at night. At today’s price it has a Price to Earnings Ratio of 5.52 and a True Price to Earnings Ratio of 3.03 with an 18 cent dividend coming in a month or so. Allan International is still a BUY!

  20. Vlad,

    These articles were originally posted on http://www.firstfinancialpr.com

  21. DECEMBER 4
    (0684.hk) 106% ROI from Allan International Holdings Ltd.
    Posted by admin in HKEx on December 4th, 2009 | no responses

    By Marcus Maher
    On June 5, 2009 my analysis of Allan International Holdings Ltd (HKEx: 0684) , a manufacture and seller of household electrical appliances, concluded that the Company deserved a 5 Star Rating and that intelligent investors should buy it immediately.

    At the time the share price was HKD1.02, so the current increase to HKD1.99 plus the HKD0.12 dividend puts the return on investment at HKD1.09 or approximately 106%. One million Hong Kong dollars invested in Allan would have grown to over two million in just six months.

    At this point I suggest selling half of the shares you have in Allan International Holdings, essentially returning to cash your initial investment funds. I am confident the fundamentals of Allan are excellent though with the present uncertainty in the markets 106% profit over a six month period needs to be realized. The other half of the funds you have remaining in Allan I would keep as a long term investment with the dividends keeping you warm at night during turbulent times.

    Marcus Maher

    Chief Business Analyst – China

    Disclosure: Marcus Maher currently owns shares in Allan International Holdings Ltd.

    Remarks : Due to reporting and updating time-lag, readers and users should exercise caution when using the data presented in this analysis.

  22. NOVEMBER 7
    (HKEx: 0684) November 7: Allan International Holdings Ltd
    Posted by admin in OTCBB on November 7th, 2009 | 2 responses
    (HKEx: 0684) November 7: Allan International Holdings Ltd
    Business Review – Expectation for increase in half-year dividend payment for period to 31st September 2009
    After an incredible performance by management, end of year results for the year ending 31 March 2009 profit was up 65% (HK$64,872,000 to HK$106,938,000), cash on-hand doubled (HK$163,221,000 to HK$335,164,000) and debt almost halved ($33,194,000 to HK$19,755,000).
    The annual dividend increased from 10 cents to 14 cents per share, up 40%. Historically management has been very generous in its sharing of company profits with shareholders. In 2007/8 the interim dividend was 4 cents with final dividend 6 cents while 2008/9 interim was 2 cents and final 12 cents.
    Management has a tendency to adjust dividend payment according to cash flow requirements and profitability. With cash on hand doubling to HK$335,164,000 and profit up 65% to HK$106,938,000 the company has a cash hoard that makes it the envy of all listed companies on the Hong Kong Stock Exchange. The expected dividend will be influenced by a combination of the historical ratio of interim to final dividend, cash on hand, net profit and future investment requirements. We expect the interim dividend will be 6 or 8 cents, when added to the most recent final dividend of 12 cents it will total either 18 or 20 cents. With a share price of 1.72 that is a return of 10.46% or 11.62% on the current share price of 1.72.
    In these uncertain times we suggest that Allan International Holdings Ltd is a safe port in a storm with its affordability evidenced by a P/E ratio of 5.4, world-class management and consistently large dividend payments.
    Marcus Maher
    Chief Business Analyst – China
    Note: Marcus Maher currently own shares in Allan International Holdings Ltd
    Remarks : Due to reporting and updating time-lag, readers and users should exercise caution when using the data presented in this analysis. Please see the Disclaimer and the Important Notes.

  23. JUNE 26
    (HKEx: 0684) June 26: Allan International Holdings Ltd
    Posted by admin in HKEx on June 26th, 2009 | no responses

    Business Review – for the six months ended 30 September 2008

    End of year results will be available soon and we are expecting good news. Since our last post on the 6th of June 2009 the share price has moved from 1.02 to 1.11 back down to 0.99 and is now sitting on comfortably on 1.05. Going over the first half results once again we are reminded that profit and turnover were both up for the half year with lots of cash in the bank to ride out these uncertain times.

    Net profit for the period increased to HK$54,849,000 (2007: HK$41,638,000).
    Turnover increased by 36% to HK$990,948,000 (2007: HK$725,282,000) consolidated net profit increased by 32% to HK$54,849,000 (2007: HK$41,638,000). Sales to Europe increased by 41% to HK$566,368,000, turnover to America increased by 35% to HK$178,954,000, turnover to Asia increased by 29% to HK$218,254,000 and turnover to other markets increased by 19% to HK$27,372,000.

    Cash held HK$115,563,000 (31 March 2008: HK$163,221,000) in cash and bank deposits, total borrowings were HK$38,452,000 (31 March 2008: HK$33,194,000).

    Marcus Maher

    Chief Business Analyst – China
    Note: Marcus Maher currently own shares in Allan International Holdings Ltd

    Remarks : Due to reporting and updating time-lag, readers and users should exercise caution when using the data presented in this analysis. Please see the Disclaimer and the Important Notes.

  24. JUNE 6
    (HKEX: 0684) Allan International Holdings Ltd.
    Posted by admin in HKEx on June 6th, 2009 | no responses

    Analysis by Marcus Maher

    Intelligent analysis of Allan International Holdings Ltd, a manufacture and seller of household electrical appliances, concludes that Allan International Holdings deserves a 5 star rating:

    Immediate Buy

    The current share price at HKD1.02 with a Price to Earnings Ratio of 5.27 and a current dividend of 8 cents or 7.84% return is, at the time of writing, the best value for money in the Hong Kong stock market. The previous financial years’ dividend was 11 cents representing a 10.78% return based on the current share price. The company has a history of adjusting dividends to match company performance and cash flow requirements. The end of year financial results are expected to be strong so we are looking for an increase in dividend payments.

    Buffet and Graham love these types of companies: Net Asset Value is HKD540,827,000 with Market Capitalization of HKD342,141,170. This represents buying a dollar of value for 63.26 cents.

    Allan International Holdings Ltd – Last Updated: 5/6/2009
    Issued Shares: 335,432,520 (as at 30/4/2009)
    Market Capitalization: HKD 342,141,170
    Financial Year End Date: 31/3/2008
    Net Asset Value: HKD 540,827,000
    Net Profit (Loss): HKD 64,872,000
    Earnings per Share: HKD 0.1934
    Dividends:
    30/12/2008, Int Div 2 cts,
    15/08/2008, Fin Div 6 cts
    27/12/2007, Int Div 4 cts,
    14/08/2007, Fin Div 7 cts

    Marcus Maher
    Chief Business Analyst – China

    Disclosure: Marcus Maher currently owns shares in Allan International Holdings Ltd.

    Remarks : Due to reporting and updating time-lag, readers and users should exercise caution when using the data presented in this analysis. Please see the Terms of Service.

  25. Have you written any other articles on Allan International?

Comments are closed

The Contributor

Marcus Anthony Maher is a China business strategist who has established an assortment of companies and businesses in China, Hong Kong, Thailand and Australia. The companies vary in scope, including a magazine, a language training center, several consultancy companies specializing in investment, education, immigration and trading solutions, electronic component quality assurance, wine export/import & wholesale, wine bars and shops, retail clothing, carbon market consultancy, property and most recently a fitness lifestyle business.

    Connect with Marcus:
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