July 27, 2012 - 7:57pm EST by
2012 2013
Price: 19.05 EPS $3.00 $3.30
Shares Out. (in M): 5 P/E 6.3x 5.8x
Market Cap (in $M): 101 P/FCF NA NA
Net Debt (in $M): -3 EBIT 20 23
TEV ($): 98 TEV/EBIT 4.9x 4.3x

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  • Retail
  • Asia
  • Discount to NAV
  • Holding Company
  • Dividend yield
  • Liquidation


Retail Holdings N.V. (formerly Singer N.V.) continues to be "safe and cheap". It's reasonably "safe": controls a number of very old (from the late 1800s), yet growing, retailers of consumer durables in Bangladesh, Pakistan, Sri Lanka, etc. And, it's "cheap": trades at 0.54x market NAV of $35.2 per share and has a 10.5% "distribution yield" (with an expected distribution of $2.00 shortly in September). The catalyst is that the company is self-liquidating over the "medium-term". From 2007-2012, the company will have paid $7.25 per share in distributions (all of which, except for the 2007 distribution which was an ordinary dividend, have been treated as return of capital for U.S. federal tax purposes). It trades as "RHDGF" on pink sheets.

Business summary:

RHDGF owns 56.13% of Singer Asia, which in turn has 75.0% of Singer Bangladesh, 78.9% of Singer India, 70.3% of Singer Pakistan, 86.1% of Singer Sri Lanka and 45.5% (actually 43.1% as of 3/31/12) of Singer Thailand. Including net cash and sellers notes, market NAV was $35.20 per share at the end of 2011. At end of 2011, NAV on a book value (BV) basis was $16.51 per share (TBV per share of was $15.32). KPMG is the company's auditor.

At the end of 2011, retail outlets were 351 in Sri Lanka, 314 in Bangladesh and 160 in Pakistan. Also at year-end, distributors and dealers were 704 in Sri Lanka, 1,017 in Bangladesh and 252 in Pakistan. Overall product mix (2011) is 38% home appliances (mostly refrigerators), 32% electronics (about half TVs), 19% sewing and 11% other. Most of the products are branded as Singer (or a related brand) and are sourced from third-party manufacturers.

In 2011, Sri Lanka had impressive growth, with sales up +40.0% to $199 million and net income up to $14.5 million (from $6.3 million in 2010).  Singer Sri Lanka has about 30% market share in Sri Lanka for durables for the home (including 55% share of refrigerators, 37% share of washing machines, 35% share of TVs and 80% share of consumer sewing machines). Sri Lanka now represents more than 50% of the company's consolidated sales and profit.

Meanwhile in 2011, Bangladesh sales were up +5.4%, and Pakistan sales were up +4.5%. Singer Bangladesh has about 20% market share in Bangladesh for durables for the home (including 18% share of refrigerators, 15% share of TVs and a 38% share of consumer sewing machines). Singer Pakistan has about 8% market share in Pakistan in durables for the home.

In 2012, Singer Asia is expected to add 60 retail stores (with a focus on Bangladesh and Sri Lanka) and renovate 120 retail stores.

Approximately 45% of Singer Asia's sales during 2011 were on credit. In 2011, Singer Asia completed 10.3 million financial services transactions and had about 483,000 active installment accounts at the end of 2011. Singer Asia's collection experience has "generally been very good", with only 1.5% of installment receivables in arrears at end of 2011 (ranging from a low of 1.1% in Sri Lanka to a high of 4.0% in Bangladesh). Impairment loss recognized was $1.8 million in 2011 and $1.6 million in 2010.

CEO Stephen Goodman owns 893,856 shares (16.8% of total) and his spouse is the trustee of three trusts which own another 446,228 shares (8.4% of total). Salaries/ bonuses were $1.5 million for 2011 for the 9 executive officers and directors.

Distribution history:

Since 2007, RHDGF has paid out the following distributions: $1.00 per share (ordinary dividend) on record date 7/19/2007, $0.75 per share on 8/27/2008, $0.20 per share on 8/27/2009, $0.80 per share on 8/5/2010, $2.50 per share on 9/26/2011 and $2.00E per share (helped by the recent prepayment of $5.0 million of SVP Notes) around 9/15/2012. That would be a total of $7.25 per share in distributions since 2007.

Recent earnings history:

RHDGF had EPS ("profit attributable to equity holders", which is equivalent to diluted EPS) as follows: $2.65 for 2011, $3.14 for 2010 and $1.78 for 2009. I expect EPS to grow modestly in 2012 and 2013.


Self-liquidation over the "medium-term" (continued distributions and possible sales of its holdings at or above current market values).
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