SGI Update

I finally read SGI’s 2012 financial statements and the figures are as expected. No surprises but below are the details that might interest you.

SGI’s High Inventory Turnover Rate

SGI1

An inventory turnover of 6x suggests that SGI replenishes their inventory 6x within the year.

 

myHouse Brand’s Aggressive Sales Growth

One of the catalysts mentioned in my buying of SGI is the possible robust sales of their modular houses under the myHouse brand. myHouse sales jumped from 13 million in 2011 to 39 million in 2012 or an increase of 200%. As good as it sounds, myHouse’s contribution to SGI’s total sales is still negligible. A hint on the demand of the myHouse brand is the 31 million advances that are paid by customers for the product. The P31 million advances were computed as follows:

SGI2

The 31 million is a sure sale for SGI this 2013. Again the amount is negligible but assuming that SGI will boost their marketing campaign for the product, myHouse has a high probability of driving SGI’s revenue growth in the future.

 

Presentation of the Financial Statements of Guangxi Fil-Dragon Real Estate Development Limited

The presentation of the Guangxi Fil-Dragon financial statements enlightened me on SGI’s source of real estate revenues. It appears that the only contributing real estate project of SGI is their joint venture (JV) with Samsung Corporation for the development and sale of industrial estates. However, there were no details regarding the JV with Samsung in SGI’s financial statements or PSE disclosures.

That said SGI’s P850 million customer’s deposit will eventually be recognized as revenues as soon as their Golden Hill project in Nanning, China will begin construction.

Also worth noting is Guangxi Fil-Dragon’s low debt levels. I expect SGI to acquire more debt this 2013 to fund the Golden Hill project and take advantage of the strong real estate industry in China.

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