HTL International – A net-net stock
HTL International has become a net-net stock again (net-net means its market capitalisation is equal to its net current assets minus non-current liabilities). It once sold at a ridiculous low price of 7 cents during the 2008 financial crisis (and the company employees got a good bargain when the company issues share options at that price).
Although its net debt to equity ratio, currently at 41%, exceeds its maximum limit of 35% which is a concern. But if prices of raw leather hides start to fall, it will use less working capital thus reversing the negative cash flow problem seen in Q1 2012. Restructuring of Domicil in Germany is underway and thus not cause a drag on the sofa business.
Disclaimer: I am vested in this stock.
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