ECL - Excelsior Capital

[Realist]

Market Cap of $40M and makes a $7M profit each year

Has a PER of 5.5 and a P/B ratio of 0.45

Has more than $50M NTA

am I missing something?

Could you not just buy out this company and liquidate it for more than you paid?

But why would you, it makes a healthy profit!

I have shares in this company and they are going nowhere fast. Which is amazing, it pays good dividends too!

 

[suhm]

Re: CMI - surely you could liquidate it for more than you bought it for?

Same here, I mean pacifica recovered after its profit downgrade and trades at a large premium to cmi. I guess the whole car parts sector is being depressed at the moment and it dropped out of the all ords index so its not very big anymore, personally I'm just gonna sit it out and collect my dividends.

suhm

Edit: Whatever happened to their buyback, I stayed in because I thought if the board thought they had the capacity to buyback about 15% of their ordinary shares the future couldn't be all that bleak, but at last count they had bought like 50,000 shares and that was months ago. Liquidity for the on market buyback might be an issue as only about 30% of the company turnsover every year

 

[Realist]

Re: CMI - surely you could liquidate it for more than you bought it for?

So you have CMI as well? Nice to hear someone else has it.

I'm just staying in.

A solid company that makes a good profit, pays nice dividends, has cash to spare, virtually no denbt, and seems conservatively run. What more do you want?

It can only go up from here!!

My tip is someone will take it over. If I had $40M I would. I'd make 17% profit on my investment year on year!! And I could just liquidate it for more than $40M when I wanted to pull out anyway.

It is a steal at this price!

 

[silence]

Re: CMI - surely you could liquidate it for more than you bought it for?

Heh, convince the bank to let you borrow $40 million.

It seems to have turned upwards again, I'd be looking for an opportunity to buy in if I had any spare capital..

 

[Realist]

Re: CMI - surely you could liquidate it for more than you bought it for?

Hmm, it is too.

CMI will have it's day sooner or later - someone will want to take it over. When is anybody's guess though. In the meantime holders get a good yield.

 

[suhm]

Re: CMI - surely you could liquidate it for more than you bought it for?

hmm wonder if that day might have arrived but maybe i spoke to soon

 

[frankbaozhu]

Re: CMI - surely you could liquidate it for more than you bought it for?

Hmm, it is too.

CMI will have it's day sooner or later - someone will want to take it over. When is anybody's guess though. In the meantime holders get a good yield.

I agree, CMI will have its day. But it has been more than 4 years and the stock price is still at the bottom. You need more than conviction to hold onto it. Realist, I hope you still have this stock.

I did not mean to bash the stock. Quite the opposite, CMI is my largest position in Australia and this is going to be a 5 bagger easily in 5 years.

 

[Julia]

Re: CMI - surely you could liquidate it for more than you bought it for?

\

I did not mean to bash the stock. Quite the opposite, CMI is my largest position in Australia and this is going to be a 5 bagger easily in 5 years.

That's a pretty definitive claim. What do you have to substantiate it?

 

[Joe Blow]

Re: CMI - surely you could liquidate it for more than you bought it for?

I did not mean to bash the stock. Quite the opposite, CMI is my largest position in Australia and this is going to be a 5 bagger easily in 5 years.

Frank, you really need to substantiate this claim. On what basis do you believe that CMI is going to see a 500% increase in its share price by 2016?

 

[frankbaozhu]

Re: CMI - surely you could liquidate it for more than you bought it for?

Frank, you really need to substantiate this claim. On what basis do you believe that CMI is going to see a 500% increase in its share price by 2016?

Like AMA, you do not have to be a genius to do the math. Let me assume the following scenarios, which is not heroic at all.

Let's say the economy is slowly recovering over the next few years. The electrical group did 11.8 million in EBIT last year, and with the increasing investment in mining, we can suppose they can do 14 million by 2016, which is conservative. Let's also assume TJM will be break even in 2016, even though ARP has a 20% operating margin which is in the same business. Finally, the class A shares will be redeemed @1, and that gives 28 million in potential debt.

After all those dusts settled, the earning power should be obvious to the public. A 10X EBIT will give you 140 million. The current EV is 16 million. You can argue that 28 million is debt, but common shareholders do not have to pay anything for now.

In 2012, if CMI chose to redeem the A shares, we would have the following capital structure, 9 million cash on hand + 8 million cash generated from operations - 28 million redeem cost, which is 11 million for CMI in net debt. To 2016, let's say CMI earn 8 million in cash for 4 years, it will have roughly 21 million in cash, and an operation worth 140 million, that gives you a market value of 161 million, which is several times over the current ones. I know there are operating costs on the parent company level, but I choose to pass it in favor of simplicity.

The reason I am confident those things will happen is that insiders are on our side completely. Look at the insider dealings. Richard's sister or whoever bought over 3 millions share over 3 years @ an average cost @ 0.85. And most recently she bought over 2 million shares @0.75 when the shares were selling at 0.68. She even purchased shares in here super annu fund. Why would she do that if she does not know anything? One thing more intriguing is that insiders seemed to have stopped purchasing long time ago. But this is deceiving. If you look at the purchases made by the Catelan lady, you will see while Richard stopped buying, his sister was on a buying spree! And that is because she is still a minority holder and doest not have to report her purchase. If insiders can earn 5 times of their money within 5 years without spending much efforts, they will do it sure.

There is plenty margin of safety in this situation, and we do not need heroic projection to make a homerun. Of course we can never predict what will happen in the next few years, but the probability losing money @ current price is negligible.

 

[frankbaozhu]

I am not feeling well reading those words I wrote 9 months ago. For the record, I sold my position early in the year @1.03. Now it is 1.25. The electrical division is earning roughly 18 million in EBIT and the auto business is roughly break-even, although I am still skeptical about the auto business93. I assumed in my writing those things will happen in 2016. It is good I was wrong.

To get a 5 bagger from the price I mentioned this company, it has to go to 3.3. Now, it is a lot closer. Even though the stock has almost doubled, it is still very cheap. The math is simple. For 33 million shares outstanding, EV is 41.3 million. Assuming A shares will be redeemed @ 1.2(being conservative), that is 33.6 million. Remember, those are essentially debt without interest. So with EBIT standing at almost 19 million, EV/EBIT is 41.3+33.6-16(cash)/19, which is 3.1x. Sounds cheap.

But again, debt is a blessing in this situation. Class A share holders were screwed for a few yeas now. Every interest payment skipped will go directly to common shareholders. If this situation goes like this forever, those debt is not really debt, but equity. That gives you EV/EBIT of 1.35x. There is a big IF when and at what price those A shares will be redeemed. I do not know what lies in the future, but I do know CMI will easily pay down those debt in 3 years in the worst scenario. What is a multiple we should assign to this outstanding business like CMI? Not 1.35x EV/EBIT.

It is sometimes even a surprise to me that investing can be so simple. A good idea can be easily expressed in a few hundred words. I hope you guys enjoy it.

 

[System]

On January 17th, 2019, CMI Limited (CMI) changed its name and ASX code to Excelsior Capital Limited (ECL).

 

[Dona Ferentes]

one of those funny ones ... no posts for ages, decades really, assuming it's the same outfit.

.
market cap is under $80 million ...and today has sold the larger asset, the Electrical division, to IPD.
..... leaving it with the managed investments biz
- Listed equities - 0.1%
- Non-listed equities - 1.1%
- Alternative Assets Managed Investment Funds - 18%
- Property Trust - 0.4%
- Interest Rate Securities - 1.2%
- Other - 1.2%
- Cash & deposits - 78%

.. which is sort of what you'd expect with so much in liquids.

SP ran on the sale news:

 

[Dona Ferentes]

latest update ... Sale of electrical division approved.

Excelsior Capital Limited (ECL)
shareholders today approved the sale of CMI Operations Pty Ltd, a wholly owned subsidiary of ECL, to IPD. As set out in IPD’s announcement on 28 November 2023, this was a key condition for the completion of IPD’s acquisition of CMI. IPD now expects that the acquisition will complete on 31 January 2024.
.
cashbox/ big pay out/ refocus (target) ??

.
last trading at $2.86

 

[galumay]

Just found this one screening for things to look at. It has piqued my interest!

 

[galumay]

Lost interest quickly, they have sold the electrical division which was the only profitable part of the business, retained the investment arm which has been an unmitigated disaster underperforming markets by a massive amount, 2 shareholders have moved a motion to have the company wound up and put into administration to pay out the assets. Probably a sensible option, and there is the option to gamble on the outcome as the current share price is $3.15 and the wind up would probably deliver close to $6 per share. But if the motion fails you are stuck with a dud of a business and I imagine very little liquidity! Not for me.