105 - The New
Mercury
Sometimes there are not
much details or informations of a particular stocks that investors can have
access to other than the occasionally announcements. Even then, the
informations are also not easily understood by the average man on the streets.
Take for example, one of
my early favourite stocks : Mercury
Industries Berhad. It has successfully
changed into a pure construction player exiting its car paint business. But I
couldn't gather enough clear details from its announcements and I was left
wondering how the new Mercury is progressing and how its financial positions
would be.
Early birds readers who
have been reading my every blogs would know that Mercury was one stock that I
dared readers to walk the talk with me. (Refer back to my blog : Walk The Talk
with Mercury Industries Berhad With Me. Dare You? It was dated : September 3,
2013).
At that time of
"challenging readers invest with me together" this Mercury stock, it
was on the premise of its easy to understand business of being in the car paint
business. It was principally involved in the manufacture and trading of
automotive paints and other related products used in the auto refinish
business.
The automotive paint
business is deemed resilient since there would be constant requirement of
vehicles to repaint their car after several years on the road. Besides total
vehicles sales were constantly in the range of 600,000 units per year.
It is a business that is
easily understood by any investors. It is that reason why I invested in.
Besides another plus point is its consistent dividends which is above bank's
fixed deposit rates.
Then two years ago, out
of the blue, Mercury began its journey to become a pure construction player. I
decided to stick with its' new business venture to see how it pan out. But not
much was understood by investors as Mercury is a rather low profile stock that
is hardly covered by analysts.
As such, it didn't
attract much investing attention and its volume is hardly traded most of the time. Even so if there is, it is
just a few lots changing hands.
But in the September
issue of The Edge Weekly dated September 25, 2017, a good detailed coverage of
Mercury Industries Berhad seemed to have a magic spell on its stock. The clear
write up of the latest strong financial standings and its plans to grow its
business by acquiring construction-related companies must have scored high
marks.
Demands for its usually
thinly traded shares spiked up the following weeks and from its last traded
price of RM1.27 on Sept 21 (before The Edge Weekly issue on Sept 25), Mercury
saw its shared surging days after days. It reached its 52-week peak (or perhaps
its last six year high) at RM2.08 on Oct 11. Since then, it has been hovering
at RM1.90 plus minus.
From what I am able to
digested or understood from The Edge Weekly article is that Mercury is
officially a cash rich company with RM10.5 million. While this cash amount is
peanuts compared to other construction big boys, one must note that Mercury is
a small based company with only 40,182.000 shares.
Also it is now more
clear with its earnings visibility as it bends on acquiring small
construction-related companies to strengthen its business.
So far its first half
year 2017 net profit of RM11.6 million (thanks to RM9 million gain from the
sale of the automotive paints division) has put it into a nice net cash
position. Although it is unlikely to match its second half profits to its first
half, as long as there is decent profits to be made, investors can confidently
look forward to another good dividends of at least a six sen payout.
Besides, there might be
a possibility of bonus issue or share split exercise as early as next year
according to its managing director, Datuk Tiong Kwing Hee.
I also like to stress
that I am still holding on to my 36,000 shares of Mercury even though it is now
a completely different kind of company. Even though the share price has soared
quiet substantially from my purchasing prices.
I
am still walking the talk with the new Mercury. What about you?
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