A net net working cap stock with a final divi of 4.8% (HDT)

Ben Graham's lost lectures: http://www.wiley.com/legacy/products/subject/finance/bgraham/benlec1.html

Graham-Newman letters to shareholders: http://www.ticonline.com/graham-newman.partner.letters.html

Warren Buffett's partnership letters: http://www.ticonline.com/buffett.partner.letters.html

Walter Schloss 1985 Barron's interview: http://www.scribd.com/doc/14136584/Walter-Schloss-Barrons-1985

Walter Schloss' 16 Golden Rules: http://www.gurufocus.com/news.php?id=72536

Walter Schloss Collection: http://www.gurufocus.com/news.php?id=72642


Liarspoker - 26 Oct'09 - 15:03 - 39 of 39 edit


Just did a 10 year study of the net working cap position and the high and low share prices for that year.

I will list 1) the year 2) the net working cap per diluted share and 3 ) the high - low share price for that year

2008 132p 140p 66.5p
2007 105p 170p 117p
2006 98p 121p 80p
2005 96p 123p 70p
2004 84p 126p 65p
2003 66p 70p 27p
2002 69p 80p 46p
2001 78p 153p 43p
2000 75p 120p 99p
1999 68p 117p 88p

So we can see that net working cap has been increasing nicely since the turn in 2003 and apart from the 70 & 80p high prices every other annual high price has been nicely above todays level.



Compelling Valuation


Holders Technology is trading at a substantial discount to net working capital.

Current Assets ( excluding the current tax asset ) equal GBP 7,252,000.

Total Liabilities equal GBP 2,098,000.

This gives net working capital of GBP 5,154,000.

Deducting 30% from the net working capital gives net net working capital of GBP 3,607,800.

The market capitalisation at the moment is a mere GBP 2,630,000.

Please note that the market capitalisation is also less than:

( Cash + ( Inventory X .5 ) + ( Receivables X .75 ) ) less ALL liabilities

Making it a supreme bargain on assets alone.

Tangible fixed assets, not included above, amount to GBP 651,000.

Therefore any offer made at twice the current market capitalisation is still cheap on tangible assets alone. The goodwill of a going concern based on an operating business, customer list/relations, sole supplier status and brand name to mention a few are throw in for free at such a price.

Revenue: GBP 17,481,000 ( not including inter-segment revenue )

Geographical Revenue Spread:

UK: 30.15%
Rest of Europe: 64.81%
Asia: 5.04%

Holders Technology is active in the UK, The Netherlands, Germany, Sweden, China and India.

Niche market segment: Holders Technology is the sole supplier of Kemmer Equipment ( Drills, Routers, KDD Software etc )

Graphic PLC was the first company to use the KDD Software for inventory management through Holders Technology particularly liking the automatic re-stocking aspect.

Accreditation: ISO9001:2000 accreditation achieved.

The printed circuit board industry is currently facing strong headwinds therefore HDT have announced that H1 2009 might lead to a loss making position. However a new product line which was recently launched has shown signs of good interest and demand and is due to attribute to revenue in H2.

Cash flow positive with a GBP 646,000 inflow, not accounting for dividends paid, year on year to end November, 2008. GBP 52,000 of this was due to favourable foreign exchange rates.

Due to strong cash generating abilities and a strong balance sheet HDT are paying a final dividend with a yield of 4.80% on todays purchase price of 68p per share ( you can buy within the spread. Be cheeky with the MM's ).

Included in current liabilities is bank debt which equals GBP 237,000. Offsetting this against cash of GBP 1,744,000 gives a net cash position of GBP 1,507,000.

Final divi of 3.25p goes ex on 22nd April, Payable on 19th may.