The new member of my value-stocks-portfolio.
I bought it at 65 sen per share, a 47% discount from its net-working-capital (according to its Sep-2009 report).
However, judging from any other view, Rex doesn't sound like a good investment choice:
- its PE ratio is high.
- bad dividend record （didn't pay dividend from year 2002 ~ 2006). DY of 2007 and 08 is quite low too.
- its profit margin showed a trend of descending during the past ten years. Though its revenue boosted up in recent years, PAT continued falling.
- high investories & receivable.
- trading volume of shares is very low.
In other words, the decision to invest in Rex is purely Graham's net-working-capital approach, without any other supporting point (e.g. low PE, high DY, high cash, low debt...).
Hence, this transaction is a meaningful case-study to test my net-working-capital strategy. If the return from this investment turns out to be good ( > 20% p.a.), it would be a strong support for me to continue practicing this strategy.
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