Purchase of Koda @ 29.5 cts (27 Oct 05)

The stockmarket has corrected significantly and my portfolio has taken a hit. My unrealised investment would likely to go into red for the first time since Jun 2003.

Anyway, I went ahead and take a small stake in Koda (trailing of PE 6.6), a wooden furniture OEM listed in 2002. Koda's revenue has grown from $37M in 2002 to $69M in 2005 and its profit jumped from $3.6M to $5M during the same period, representing a growth of 86% and 38.8% respectively.

Aftering browsing through the prospectus and annual reports for the past two years, I decided to take up a small stake to keep my interest in this company. My feel about the management after reading the reports:

- Although the company is family run with its key management posts filled by the Koh family, the Directors are modestly renumerated. Dividends have grown during the period and with the bonus issue, it appears that the family-management-major shareholders have aligned their main interests with us, the minority shareholders through the profit shareing via dividend distribution method. Yielding a decent 3.4% at my purchase price, the pay-out is only 22%, suggesting there is room for further dividend increase.

- The managment's letters to stakeholders are toned to be humble and honest. The Chairman/ founder is direct and quick to admit its mistake in year 2003 by openly discussing it. The MD had explained at great length the financial highlights and company's strategies for the year forward impressing me with his open style.

From results announcement, it appears that the company is still on its path for further growth in the OEM markets in Europe and possibly America through its design innovation and cost advantage for next one to two years.

Will hold these 6 lots new shares tight for the coming dividend and the next half year results for decide for further increase in my stakes if the price is right.