Free money, anybody?

My post is lost. I will try to get it back.

Later..

The shape of things to come...

AEI Corp Ltd - A global specialist manufacturer of precision aluminium extrusions.

AEI moulds aluminium into useable shape and form for use in electronics/precision engineering and construction/infrastructure. The former, accounting for 80% of total group turnover, mainly constitutes of electronics, PCs, HDD and consumer product industries. AEI's products have also been used in extruded profiles of buildings such as Shangri-La Rasa Sentosa Singapore, Clarke Quay MRT Station, SIA Building and The Second Link.

Both sectors should do well, especially with the anticipated construction recovery and increasing consumer/tech spendings.

Management has capitalised on their expertise in spciality alloys and expand into different sectors, like Oil and Gas, and sports and recreational equipment. These should broaden turnover base and improve margins.

Price of aluminium

Naturally, AEI's profitability is highly affected by the price of aluminium (and indirectly the price of oil). LME aluminium has stayed at high levels of around USD2780/ton (off the highs of USD3200/ton in May 06). Management has not explicitly indicated how they would deal with the price of aluminium though.

Value?

As of 30 Jun 06, AEI has a healthy cash and bank balance of around $12.3 million with no bank loan although it was $6.5 million higher 6 months ago (a corresponding increase in inventories of $5 million). Nevertheless, cash per share is 5.5 cents. Management has also issued a positive outlook on the core sectors of their business. NTA is abit over 23 cents.

At a price of 17 cents, based on the dividends dished out in 2006, yield is a respectable 8.8% coupled with very undemanding and improving financial ratios (PE 5x, 30% revenue growth, 14% ROE etc).

Conflicting signals?

CEO and his wife (a Director in the company) has been paring their shareholdings since Apr 06. Together they held 55.05% of the company in 23 Mar 06. Since Apr 06, 22@21 cents and 41m@12.5 cents have been placed out. A "Ong Chin Yew" and Maxcellon Capital Assets Ltd have appeared as SSHs.

Make it your business?

At the current price of 17 cents, you are buying into a promising business (net cash) at 11.5cents compared to a NAV of 23 cents. One thing to note is CEO Ian Tan's action. Company appears to be healthy but the placements of big blocks of the company shares (raising more than $10 million) is indeed puzzling. Caveat emptor.