PCI Limited update

Hi guys its been a long time. Here is an update on PCI Limited, whose share price has gone up by 49.35% since my last post about it on 22 June. Yep, you didn’t read that wrongly.: 49.5% in 3 months!

PCI limited

Why has its share price gone up?

Well, this is due to its strong performance where it registered an increase of 71.2% in its net profit from FY 2017 to FY 2018, and also because it had been undervalued by the market as mentioned earlier.

Another reason for its sudden surge recently is also because its majority shareholder, Chuan Hup holdings (whom owns 76.7% of PCI) was approached by a third party in a potential transaction of PCI’s shares. I have previously identified possible privatization as one potential opportunity for investing in PCI. However, I doubt that Chuan Hup will give up its share to a third party given the strong performance of PCI limited, unless they offer a VERY attractive price.

I forgot to talked about PCI’s balance sheet in my previous post, so i will briefly summarize it here. As of FY 2018, PCI has cash and bank balances of US$57,974,000 while having a total liability of US$65,998,000. This means that PCI is almost able to pay off all of its debt just with its own cash – testifying to its strong balance sheet and cash-generating business.

PCI Limited Balance Sheet

Is there still potential for PCI at this moment? I think the answer is yes but at the current share price the downside compared to upside is slightly higher since it has gone up a lot and well beyond the intrinsic value i calculated previously.

In the end, it is all up to your risk appetite. Always remember to weigh between potential risks and rewards & happy investing!

-Jack

Disclaimer: The author has already liquidated all of his shares in PCI limited.

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