TRIUS INVESTMENTS INC.(CVE:TRU)

Web Site
Yahoo Finance
Filing


Sept. 12, 2014
2014 Q2 Data
Check list:
1.Major Business.
Small garbage collection company locate at Fredericton, New Brunswick. It also 2 major investment in real estate one in salt lake US another in Calgary for toally $2m. Its founded and controlled by Gordon Wheaton and his family. The family has several other small business which can be found at the website.


2.Balance sheet.
Recent price is $0.365. Shares 10.35m+1m options prices at $0.11. Market Cap $4.2m. Tangible book value $0.44.  Debt less than $1m.

3.Credit facility.
Not important

4.Financial data by years.

5.Insider holding, options, Insider trading info, share buy back.
Gordon Wheaton(CEO): 3.35m  32%. + 300k options.
Robert  Harrison (CFO)  100k options.
Andrew S Burgess(Director) 300k options +970k shares?
John M Robertson (Director) 300k options + 320k shares?

Management controls 45.6% of total shares.

6.Management compensation.
around $400k for CEO +CFO for year 2012

7.Employee numbers. Revenue/Employee. Compensation/Employee.


8.Industry comparison.

9.Auditor
 EPR Daye Kelly & Associates

10.Major events.
(1)Before 2006, the rental business is its main business. At 2006, it sold the rental business back to Gordon Wheaton for $2m share of TRU (valued at $400k) which was cancelled at 2008. The name was changed to eCycling. At 2007, changed the name back to Trius investment.

(2) Since 2009, it start to invest in REIT in Utah US.

(2) Aug 2014, it sold several US investment which recorded close to $0 on book for around $1.3m. After tax should be around $1m.  The $0.44 book value includes this in calculation.

(3) Up to Q2 2014, the company invest around $650k loan + $350 equity in Colt Builders which is Canada branch created by a Salt Lake company with the same name. Its business is housing framing. At Q2, 2014, it suspended paying interest for the $650k loan to TRU.

11.Comments.
(1) The problem on Colt Builders in unknown.. Don't know whether it is temporary or permanent. Its other REIT investment seems doing quite well except for the Colt Builders. The Colt Builders has a parent company at salt lake with the same name.

(2) The core business is performing very well since 2009 with high EBITDA margin. However, its major expense should include the depreciation of garbage trucks. Based on the gain on disposal of equipment number, its depreciation expense is just enough to cover the real cost.

(3) Estimate $4m revenue, 30% EBIDTA margin.  $600k/year in depreciation, use 15% of EBIDTA for tax rate. Assume interest income will cover interest expense. It gives $1.2-0.6*0.85=$0.5m in real income. Current price is just 8x of earning. In addition, the REIT investment might generate good returns as well. However, it is a very small cap. So can't expect a high valuation.

(4) Overall the company is well managed. Although it is controlled by Wheaton and the REIT investment raise some concerns, I would not worry it too much. Also the $1m gain in recent sale might not recognized by the market. In Q3 there might be a boost in earning.

12.Links

http://www.oddballstocks.com/2014/06/calling-all-growth-investors-24-roe-at.html

http://www.siliconinvestor.com/readmsg.aspx?msgid=29343386

http://www.stockhouse.com/companies/bullboard/v.tru/trius-investments-inc/1

http://web.tmxmoney.com/news.php?qm_symbol=TRU#qmpage2

Dec. 01, 2014
Q3 release
Current price $0.375

(1)Q3 income is $0.08/share and book value is $0.44/share now as I estimated. Cash $3m.

(2) It released last week but somehow the news is not shown any where except SEDAR website. I feel it is a good news which is not recognized by market.


Mar. 29, 2016
Current price $0.48
(1)The company agreed to sell the waste management business for $5m. Its book value or waste management segment at Q3 2015 is $1.7m. So there will be $3.3m gains. Using 25% tax rate, it would be $2.5m after tax income. Added to book value at Q3 of $6.2m. It would be $8.7m new book value, using 11.35 as shares number. New book value per share is around $0.77.  Among the $8.7m, $2m is long term investment, $750k in short term investment and marketable securities. So it will have $6m in cash. I guess it might issue at least some of the cash as a special dividend($0.30-$0.50 maybe?) and keep some as well to continue the investment in US.

Apr. 20, 2016
Current price $0.50
(1)The company reported that the actually after tax gain is around $3m instead of $2.5m. So new book value should be at around $0.81/share. Net asset value is $9.2m including $7.2m cash and $2m investment.

(2)What the company will do is very interesting, I guess would be one of the following: 1)Pay out a special dividend 30c-50c and keep the rest in investment. 2)No dividend and put the cash to new investment. 3)Take the company private.  I believe given the high insider ownership and past record, no matter what the company choose to do, it is quite cheap at current price(62% of book value).

Oct. 18, 2016
Current price $0.71
The company declared $0.58/share special dividend which is $6.5m. After paying the dividend, the company might have $0.5m cash + $2m investment which is $0.22/share in book value.


Apr. 28, 2017
Current price $0.205
The company released full 2016 data. Surprisingly now it has $3m in book value which is $0.27/share. The main contribution is actually the $188k payment from its directors to pay back the company for the lost from Colt Builders. Also, there are some $300k which I think I missed somehow.  It has around $0.5m cash +$2.5m investment now. Total shares count still 11.27m.

Going forward, if the company can generate $200k income from its $2.5m investment in US, then could get around 1.5c/share annual income. Current price of 0.20 is actually quite a good one.


Sept. 18, 2017,
Current price $0.20.
(1) The company got a new director and issued 650k options to him at $0.20.

(2) Recently USD/CAD is down from 1.3 to 1.22 level. I estimate its NAV at Q3 might be $0.20 to $0.22.  Down from the 0.27 in the previous quarter. In a long run, it is still worth holding if the investment works out.

Mar. 17, 2018
Current price $0.13. Share 11.3m, Cap. $1.47m
(1) The current NAV/share is only $0.175. Mainly caused by big wrote down of investment portfolio at Q3.

(2) At Mar. 2018, the company released news that one of its holdings which is "MV Property, LLC" was sold and its share will be around $650k less any expenses. The property was recorded as $330k on Q3 2017 book and $450k on Q4 2016.

(3) Current investments

Property	Size	%	Q4 2016	Q3 2017	Dis 3Q17
MV Property, LLC	13,000	24.4%	$454k	$333k	$37k
RL Property One, LLC	16,000	20%	$199k	$166k	$19k
GS Chicago, LLC		27.8%	$671k	$459k
RW Austin Property, LLC	17,500	10%	$470k	$233k	$27k
Brunswick Members, LLC	43,000	11.8%	$671k	$333k	$39k

(4) Assuming $550k will be received for MV at the end. Assuming fair vlaue of 10 times of annual distribution. Then there will be $250k for RL, $360k for RW, $520k for BM. There will be $220k+$60k+$90k+$190k=$600k increase in NAV, which makes a $23c/share NAV.


May 8, 2018
Current price $0.16. Share 11.3m, Cap. $1.8m
(1) The current NAV/share is $0.17.

(2) If using 5% expense for MV sale. It can receive 585k in net proceed.

(3) The company released today that it will sell its GS Chicago interest for net proceed US$475k. Which is around CAD$590k.

(4) Current investments

Property	Size	%	Q4 2016	Q4 2017	Dis 17
MV Property, LLC	13,000	24.4%	$454k	$335k	$50k
RL Property One, LLC	16,000	20%	$199k	$167k	$25k
GS Chicago, LLC		27.8%	$671k	$461k
RW Austin Property, LLC	17,500	10%	$470k	$235k	$36k
Brunswick Members, LLC	43,000	11.8%	$671k	$336k	$52k

(5) Using the same formula of 10 times distribution for fair value, the fair value of above 5 will be $585k, $250k, $590k, $360k, $520k. The addition of NAV will be 250k+80k+130k+120k+180k=760k. That is 7c increase in NAV.

May 30, 2018
(1) Today the company released that it will sell the last 3 investment for around $900k. Also the MV property will not be received in cash but will be reinvested in other RE.

(2) Based on Q1 2018 numbers, it has around $400k in cash and other assets. Added together, it will be $400k+$590k+$900k=$1.89k in cash and around $585k in investment. Which is $17c in cash + $5c in investment.

Village Farms International Inc(TSE:VFF)

Web Site
Investor Relation
Google Finance
Filing
Filing

Sept. 12, 2014
2014 Q2 Data
Check list:
1.Major Business.
Producer of greenhouse tomato, pepper, cucumbers. It has 110 acres of greenhouse in BC Canada + 130 acres of greenhouse in US. Main product is tomato-on-the-vine(TOV). Its revenue is quite seasonal. Around 2:4:4:3 for four quarters.

2.Balance sheet.
Recent price is $1.15. Shares 39m. Market Cap $45m. Tangible book value $1.5.  Debt $57m.

3.Credit facility.
Bank line of credit: $10m. currently $4m outstanding.

Term loan mature at Apr. 01, 2018:  Current interest is below 4%. $53m outstanding. Annual repayment is around $4.2m.


4.Financial data by years.

5.Insider holding, options, Insider trading info, share buy back.
Michael A. DeGiglio : Founder CEO, 10m, 26%
ALBERT VANZEYST: Co-Founder,  9.4m, 24%,

6.Management compensation.
Top 5 around $1.5m/year

7.Employee numbers. Revenue/Employee. Compensation/Employee.


8.Industry comparison.

Mucci Farms: Ontario private company, 400 acres of green house. July 2014, the CEO was charged with mislabeling Mexico tomato as Canadian tomato.

9.Auditor
PricewaterhouseCoopers LLP

10.Major events.
(1) At March 2001, the company actually filed for bankruptcy due to $110m debt load.

(2) Oct. 2006, it merged with Hot House Growers Income Fund which is an income fund traded on TSX.

(3) at 2009, it converted to an corporation and stopped paying dividend.

(4) Dec. 2010, Albert Vanzeyst left the company with unstated reason. Apr 2014. he filed that he intent to sell 4.3m of shares.

(5) 2011-2012, it build another 30 acres of green house in Monahans, Texas. Cost is around $44m($37m 2011+$7m in 2012). There are 90 acres in the same location is able to build in future.

(6) May 31, 2012, its 82 acres greenhouse in Marfa Texas was damaged by hail storm. It received $47m($31m in 2012 and $16m in 2013) from insurance company. It repaired 40 acres in 2012 with probably just $3-$5m. Repaired another 20 acres from 2013 to Q2 2014 for a cost of $8m. The rest 20 acres is severely damaged and the cost to repair estimate around $12m. The rest 2 acres is for research and won't be restored.

11.Comments.
(1) From 2006 to 2013, its equity increased by $40m in 7 years after 9.4m dividend payment. However this includes the insurance payment $47m in 2012 and 2013.  Assuming $10m is extra gain from the insurance. That would translated to $40m net increase in equity in 7 years. Around $6m/year.

(2) From 2011 to 2012 $44m spent on new green house. From 2012 to 2014, over $10m spent in repair work.  It states its maintenance CapX is around $2m/year. However, the really number seems always higher. Probably around $3m/year.

(3) Tax expense is way higher than tax paid. The reason is mainly the deferred tax from insurance payment. Estimate normal tax rate 15% of EBITDA.

(4) Cash increased about $30m after $9.4m dividend. This excludes $44m spending on new greenhouse at 2011-2012. Over $10m in repair work. Totally is over $90m. That's from $42m in income, $47m in insurance proceeds.  $8m in deferred tax increase, $20 in difference in depreciation and maintenance CapX.

(5) At 2013, the US government renewed the expansion agreement with Mexico which protect US tomato grower from Mexican dumping. In 2013, the US TOV price did increased which benefited the company. However, starting Q2 2014 TOV price dropped 15%, mainly caused by 22% increase export from Canada to U.S. while mainly are mislabeled Mexican tomatoes based on VFF's CEO. I guess Mucci farm played quite a role in this, if this is true, the recent charge might stop the mislabeling.  The company also tries to lower TOV as a percentage of sales. It has decreased from 99% to 50% in latest quarter.

(7) Excludes 2012, its normal EBIDTA should be around $13m to $15m. 2014 could be lower than $10m if current price of TOV continue to be low. It also state that it might trigger its debt covenant which is quite a risk to the company now.

(8) Use $12m as normal EBITDA, $3m in maintenance CapX. $3m in interest. 15% tax. It might be able to generate ($12-$3-$3)*0.85=$5.1m/year in real income. Current price is quite cheap.

(9) Overall, the business is quite unstable mainly caused by the versatile of TOV price. Price in 2009, 2012, 2014 affect the company quite a lot. Should not heavily invested unless its supper cheap.

Hammond Power Solutions Inc.(TSE:HPS.A)

Web Site
Investor Relation
Google Finance
Filing

Sept. 2, 2014
2014 Q2 Data
Check list:
1.Major Business.
Canadian company located at Guelph, Ontario. Manufactures dry type low voltage transformers and etc. The company is close 100 years old and was founded by the Oliver Hammond. At the beginning, it just produce radios. At 1920's, it starts to build transformers and metal case. The company is passed to second generation mainly know for Fred Hammond. IPO at 1986.  At 2001, it split into 2 public companies. One is Hammond Power Solutions which produce transformers. Other one is the old Hammond Manufacturing which produce enclosures. Both companies have similar A, B share structure and both are tightly controlled by the Hammond third generation.

2.Balance sheet.
Recent price is $7.50. Shares 8,920K A shares + 2,778K  B shares. Market Cap $89m. Tangible book value $6.64.  Debt $32m. Current dividend $0.24/year.

3.Credit facility.
Bank line of credit:
(1)USD$25m  $18.7m outstanding at Dec. 2013. Interest rate is low
(2)USD$5m overdraft  $4.2m outstanding at Dec. 2013. Interest rate is low.
(3) Euro$4m overdraft $3.4m outstanding at Dec. 2013. Interest rate is low.
Term Loan: $4.8m at June 2014.

4.Financial data by years.

5.Insider holding, options, Insider trading info, share buy back.
WILLIAM (BILL) G. HAMMOND: CEO, 1m A shares and 2.8m B shares. 32% of total shares.

6.Management compensation.
CEO+CFO around $1m/year.

7.Employee numbers. Revenue/Employee. Compensation/Employee.
1470 at end of Dec. 2013. Around 1000 are hourly workers and all Canadian workers are unionized.

8.Industry comparison.
ABB, Siemens, etc.

Bemag: Canada Company, seems small(employees less than 100)

Marcus transformer: Canada Company.

9.Auditor
KPMG LLP.

10.Major events.
(1) February 7, 2008, acquired its competitor Delta Group and Delta Transformer with $12.6m in cash and $2m in stock. It contributed $38m in revenue for 2008.
(2) In 2008, it sold 45% interest in Moloney Electric Inc for $7.7m with a gain of $1.0m.
(3) 2008-2009: extra $10m CapX on set up a new factory in Mexico and a new warehouse in Canada.
(4) March 21, 2011, acquired Euroelettro S.p.A. in Italy for $7.8m with annual revenue $15m. However, in 2012, it only added $9m in revenue.
(5) Feb. 23, 2012, acquired 70% interest of Pan-Electro Technic Enterprises's transformer business in India for $15.8m with annual revenue of $16m. In 2013, it contributed $9.5m in revenue.
(6) Feb. 12, 2013, acquired resin transformer business from Marnate Trasformatori s.r.l. in Italy from $9.7m. with annual revenue about $8.0m In 2013 it contributed $6.5m in revenue.

11.Comments.
(1) Including the $8.8m dividend. It roughly increased equity value by $100m for the past 10 years. Average $10m/year.  However, average EBITDA-Interest-Depreciation-Tax is only 16.7-0.7-(2.8+0.4)-4.6=$8.2m. Seems other income is missed.

(2) Its average depreciation rate is around $3.2m/year is lower than average CapX rate of $4.1m. Mainly because  2008/2009 extra CapX. 2011-2013 have more spending in intangibles for a new ERP system.

(3) The 2008 acquisition of Delta seems a very successful one from any point of view. The 2011-2013 Italy and India acquisition is still yet to see. If removed the $25m+ revenue from those acquisition, the company is close to recover to its 2008 sales. But the EBITDA is still far away.

(4) The company's annual reports are very well written and the CEO is quite likable. Unfortunately, all the conference call recording is only accessible from phone and all expired.

(5) From 2009 to 2013, if remove the new acquisitions, the company's performance are pretty flat except an temp re-bounce in 2012. However, I do think it has quite high potential to regain growth. Although might not be able to regain higher margins like before.

(6) Going forward,  estimate $18m in EBITDA, $5m in maintenance CapX(including intangibles), $1m in interest expense. 27.5% tax/EBITDA rate. It comes close to $8.7m in real earning which is close to 10 year average. Currently price is pretty acceptable.