The under appreciated stock

A Pen Quote wrote several times about it actually. Amidst all the crashes and burns in the stock market caused by the devaluation of the CNY, this stock would theoretically be shielded from all external factors.

This stock is none other than Colex Holdings. You can read more about it here, here, here, here and here.

The stock market is very volatile lately. The recent correction experienced by STI could be attributed to:

1. Devaluation of Chinese Yuan
2. Softening of China's growth
3. Commodities rout
4. Sustained low oil prices
5. Fears of Fed rate hike
6. Weak GDP in Singapore
7. Over valued Chinese stock market
8. Greece (forever)

However, Colex positions itself to be fairly immune to any of the above factors. Being a pure Singapore play, regarded as a "necessity", and having long contracts given by the authorities (7 years), Colex earnings will be more or less shielded from all these macro events.

Yes, you heard it right, Colex is also spared from the dreaded rate hike. That's because it carries no debt on its books.

Zero debt, high cash flow, increasing EPS and stable business. Got to love this smelly business ain't it?

Last week they released their half year results and it was good as expected:

Revenue up 12.5%

PBT up 29.0%

PAT up 28.1%

EPS up from 1.74 to 2.23

- P/E at 12.6

- P/B at 1.44

Strong earnings growth

Gushing cash and room for increase in dividend payout

Looking at the half year results, looks like the annualised EPS will be at least 4.2 cents (30% growth).

Due to the low profile nature of this stock, there has been much excitement after the release of the earnings since last week. In fact, the share price dipped 9% from $0.32 to $0.29 with the general market weakness.

That shows that theory doesn't equate to reality.

However, over time, the market will act like a weighing machine. heh!

From 11 cent in 2010 to 29 cent today, that's a 163% increase with a capital gain CAGR of 21.4%. Seems like this is half of the EPS CAGR of 49.5%. However, that's just a 5 year period. The Motely Fools wrote an article recently (here) on how the share prices of Raffles Medical, Super, Fragrance and CWT exploded overtime after their EPS grew year on year.

Hopefully, Colex will follow so. I've accumulated some shares recently and will continue to do so when the market goes more volatile.

People seems to be missing out on this hidden little gem.