Seth Klarman Purchases New Stake in SAMCHULLY CO LTD

According to foreign filling, Seth Klarman’s Baupost Group bought $30m of SAMCHULLY CO LTD, a South Korean nat gas. company on 1/12/11.

Below is a brief profile:

Samchully Company Limited operates in the Natural gas distribution sector. Samchully Co., Ltd. is a Korea-based company principally engaged in the provision of urban gas. The Company mainly supplies liquefied natural gas (LNG) to residential and commercial customers in Incheon City, Suwon City, Bucheon City, Anyang City, Yongin City, Anseong City, Pyeongtack City and others. The Company is also engaged in the integrated energy supply business which supplies heat or both heat and electricity from more than one integrated energy production facility to users in residential, commercial and industrial areas; the compressed natural gas (CNG) recharging business, which operates Incheon CNG recharging station and other stations in Korea, as well as the new and renewable energy business, which operates Hampyeong photovoltaic power plant and others.

Recent stock price:

 

Below is a chart of some valuation ratios from BBG:

This looks like a cigar butt dirt cheap stock. P/S 0.1, P/B 0.4, P/E 4. This is a cheap play on natural gas, possibly on the assumptions that the oil/gas ratio will revert closer to the mean, as nat gas becomes more expensive. This seems highly unlikely, but it could be a contrarian play.

Furthermore, although EPS has dropped for the past year, the trend of revenues and earnings has increased over past few years:

Yearly View

Item    2006    2007    2008    2009 Sales Cost of Goods Sold Gross Profit SG & A Expense Operating Profit Non-operating Income Non-operating Expense Recurring Profit Extraordinary Gain Extraordinary Loss Earning Before Income Tax Income Tax Net Profit 857,541 736,196 121,345 84,795 36,550 16,975 14,460 39,065 0 0 39,065 12,776 26,289 1,125,250 994,352 130,898 94,977 35,921 14,795 8,651 42,065 5 497 41,573 13,406 28,167 1,112,893 959,423 153,470 105,161 48,309 12,791 10,084 51,016 0 0 51,016 15,681 35,335 1,258,963 1,084,031 174,932 118,494 56,438 29,531 9,438 76,531 0 0 76,531 23,480 53,051

Even if natural gas doesn’t increase in price, the company seems to be growing nicely, while the price has only been falling.

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Disclosure: None