TLUXE is for aqua food with earnings on the rise again.
A leader in what it does at a most reasonable valuation in a current favorable industry.
TLUXE (2.38) is a stock which got my attention again. This is a company I visited in the past, many members did well with it. I then advocated profit taking and never looked back. Earnings then dropped and the stock price sank. Like so many others of late, the share price already has had a nice run during the second half of this year. But I think there is more potential for further price appreciation.
Many of us have well noted that agri/food related stocks have done well of late and so its wise to have at least one going into 2010. Agri related stocks often sell at a p/e discount and yield high amounts of dividends, due to the fact they are in a volatile sector with weather, crop yields, global commodity prices forever volatile.
Yet, we may be entering a new period due to global warming, over-fishing, populations on the rise where Thai food related companies are increasingly in vogue. This could well result in a re-rating of the sector which appears already to be happening.
TLUXE reported already 90 mill. Baht profit for the first 9 months and was in the Thai press just recently stating their guidance is to earn 123 mill. Baht profit for all of 2009. Very good.
If so the earnings per share should be around 0.35 which means TLUXE is trading at around a p/e of 6.80, not demanding considering the dividend yield should approach 8%. The company states a dividend pay out policy of 60%, so on that the dividend should be around 0.21 Baht per share, or 9%. The company has some 33.3 million warrants outstanding which will about to expire in January ’10. This will dilute the earnings per share by about 10% but on the other hand, TLUXE will receive new equity, as these are convertible at 1.50 Baht per unit. 33.3 million warrants, times 1.50 = 50 million Baht of new capital to TLUXE.
Goldman Sachs and Deutche Bank appear as prominent foreign shareholder, owning as of end of August '09, some 40% of all NVDR outstanding
As I recall from my visit this is a very conservative company and a clear leader in what it does. You can see their web site at http://www.thailuxe.com
At this link you can see TLUXE has virtually no long term debt nor a problem with doubtful accounts: http://www.set.or.th/set/companyfinance.do?type=balance&symbol=TLUXE&language=en&country=US
The current earnings growth drivers is the export of mostly shrimp food which is over 80% made from local raw materials. I do not see any significant insider buying/selling.
My take is to TLUXE will yield high dividends, is in an attractive industry at least at this time, and with a p/e and dividend yield rather compelling. So I rate it with a stronger buy view, at the current price of 2.38.
Best Regards and Happy upcoming Holidays if you celebrate these.
Paul A. Renaud
