Author Topic: SIT  (Read 4 times)

galumay

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SIT
« on: September 26, 2019, 11:34:35 AM »
I am considering taking a position in SIT, this is a company that we have a vicarious holding in through the EGPCVF where its one of the largest holdings. I have no personal analysis to rely on here, rather just the judgement of Tony Hansen in taking such a large position.

First filter, is there catostophic risk?

Yes, business is not viable in its current state.

Is there balance sheet risk?

Yes there is debt with no means to service it long term. It does not have enough cash to last another year

3rd filter history of cash flows/earnings

None

Is their poor capital management?

Possibly, share count has grown greatly over the last 10 years

Does it have a good ROIC?

No

What price is fair value?

entirely depends what probabilty is assigned to the land value being realised.

What is the thesis for investment?

That the legal action will result in payment of amounts owed and that the land value in the Philipines can be realised, creating a massive cash inflow at multiples of current capitalisation

What can go wrong?

The land doesnt sell, they dont win the legal case

What are the alternatives?

The obvious alternative is to increase position size in businesses I already own, where I think the rate of return is better. This includes businesses like KME and SFC.