Memtech International

http://infopub.sgx.com/FileOpen/Memtech2...eID=347107

Cost Structure:
Cost of Sales creeps up to 82.3% of revenue, as compared to 80.6% achieved in Q4 2014
Distribution creeps up to 14.5% of revenue, as compared to 13.7% achieved in Q4 2014.

Net Profit Margin
Q1 FY2014 - 3.7%
Q2 FY2014 - 4.8%
Q3 FY2014 - 4.1%
Q4 FY2014 - 5.6%
Q1 FY2015 - 3.5%

Finance costs continue to drop as company pays down its long term debt every quarter. Short term borrowings remained unchanged at $1.111mil. Overall debt drops from $4.166mil (Q1 FY2014) to $3.055mil (Q1 FY2015). It is an encouraging sign.

I anticipate business improvements to continue march forward but keep an eye on trade receivables.

accounting earnings boosted by declining depreciation.

operating cashflow is a totally different picture to reported accounting profits.

historical track record has been patchy.

Don't know how to have faith...

Odd Lots Vested
GG

(29-04-2015, 07:47 PM)kelvesy Wrote: http://infopub.sgx.com/FileOpen/Memtech2...eID=347107

Cost Structure:
Cost of Sales creeps up to 82.3% of revenue, as compared to 80.6% achieved in Q4 2014
Distribution creeps up to 14.5% of revenue, as compared to 13.7% achieved in Q4 2014.

Net Profit Margin
Q1 FY2014 - 3.7%
Q2 FY2014 - 4.8%
Q3 FY2014 - 4.1%
Q4 FY2014 - 5.6%
Q1 FY2015 - 3.5%

Finance costs continue to drop as company pays down its long term debt every quarter. Short term borrowings remained unchanged at $1.111mil. Overall debt drops from $4.166mil (Q1 FY2014) to $3.055mil (Q1 FY2015). It is an encouraging sign.

I anticipate business improvements to continue march forward but keep an eye on trade receivables.

(29-04-2015, 08:34 PM)greengiraffe Wrote: accounting earnings boosted by declining depreciation.

operating cashflow is a totally different picture to reported accounting profits.

historical track record has been patchy.

Don't know how to have faith...

Odd Lots Vested
GG

no faith then take profit and sell loh.

latest EPS is only 0.2c USD compared to last quarter 0.3c USD(minus one time gains) Been a couple quarters liao since divesting the loss making business and not much growth in the business and very low margins. unlikely to boom like innovalues. Yield also kana compress to 4% liao.

-not v-

(06-05-2015, 08:47 PM)BlueKelah Wrote:

(29-04-2015, 08:34 PM)greengiraffe Wrote: accounting earnings boosted by declining depreciation.

operating cashflow is a totally different picture to reported accounting profits.

historical track record has been patchy.

Don't know how to have faith...

Odd Lots Vested
GG

no faith then take profit and sell loh.

latest EPS is only 0.2c USD compared to last quarter 0.3c USD(minus one time gains) Been a couple quarters liao since divesting the loss making business and not much growth in the business and very low margins. unlikely to boom like innovalues. Yield also kana compress to 4% liao.

-not v-

I closed my position before XD at 0.155 since the price has increased quite a bit and the dividend yield much reduced. May invest again if it goes below NCAV. Still like such a low debt company with reasonable earnings.

[/quote]

no faith then take profit and sell loh.

latest EPS is only 0.2c USD compared to last quarter 0.3c USD(minus one time gains) Been a couple quarters liao since divesting the loss making business and not much growth in the business and very low margins. unlikely to boom like innovalues. Yield also kana compress to 4% liao.

-not v-
[/quote]

Can't compare with last q. Factories are in china, and closed for 2 weeks during CNY. So better to look at y-y grow, which is quite good. If they continue to win auto customers, then boom will come. That's what they target to do so let see how well they execute

no faith then take profit and sell loh.

latest EPS is only 0.2c USD compared to last quarter 0.3c USD(minus one time gains) Been a couple quarters liao since divesting the loss making business and not much growth in the business and very low margins. unlikely to boom like innovalues. Yield also kana compress to 4% liao.

-not v-
[/quote]

Can't compare with last q. Factories are in china, and closed for 2 weeks during CNY. So better to look at y-y grow, which is quite good. If they continue to win auto customers, then boom will come. That's what they target to do so let see how well they execute
[/quote]

just like property sector, auto sector is likely past its peak growth in china. last i heard they were restricting car sales and the sector was slowing down. slowdown could ultimately filter down to memtech if they expand into this area. there will be a lag period when this happens, so hard to tell until a couple more quarters later.

China's Shenzhen latest city to restrict car sales

China Auto Retail Sales Climb at Slowest Pace in Five Months

factory closure is a good point but might just mean that they probably got a heap of orders before CNY period. Pretty sure lotsa people go car shopping more when they get their pre-CNY bonus so they can drive back to kampung with a shiny new car.

Bigger picture wise, just like property sector, auto sector is likely past its peak growth in china. last i heard they were restricting car sales to limit pollution and the sector was slowing down. slowdown could ultimately filter down to memtech if they expand into this sector. there will be a lag period when this happens, so hard to tell until a couple more quarters later.

China's Shenzhen latest city to restrict car sales

China Auto Retail Sales Climb at Slowest Pace in Five Months

memtech has done a good turnaround but just unlucky they are operating in a difficult environment with slowdown in China. A risk to consider now that share price has run up so quickly.

Ex-dividend the price fell down more than the theoretical ex-dividend price,which reflects the market sentiments that the growth in revenue in not likely to be as strong as initially expected.The much reduced dividend yield of around 4% also lead to some investors to turn away.
However,China's vehicle sales and the automotive industry as a whole is still growing,albeit at a slower pace,and the dividend is likely to grow in the future to reflect this.

(02-06-2014, 11:40 PM)SLC81 Wrote: Memetech no longer has Touchscreen business, it has been discontinued after the factory fire (They have the insurance covered). It also stopped them from bleeding which is a good thing. Now they left with:

1) Keypad -> Revenue decreasing for mobile, diversified in to Automotive and Electronic appliances
2) Plastic Components -> Turned to profitable 2 years ao, Increasing for automotive
3) Tooling
4) Touch Screen : full discontinued/closure

Challenges:
1) Rising Labour Cost & Shortage
2) Thin profit margin
3) No future in mobile kepad
4) Attempt to diversify/new business failed to materialize

Value:

1) Lot of cash, generate decent cash inflow to pay to dividend yearly and spend on CAPEX
2) Good track record of dividend for almost 10 years (total payout = $ 0.0865 > Share price today)
3) High hope for turn around this year after touch screen business discontinued with higher dividend payout

I am vested (small ) and at 0.84 it is almost the lowest price ever you can get. I guess It should be traded to 0.14-0.15 to be end of FY (9 more months).

This is another one of my value picks beside FUYU. Patience is a virtue. It took few months longer to reach and surpass my target :-)

Maybe you can create a thread to share your value picks.
What do you think of the plastics molding industry performance in general for this year?And also the your opinion on another plastics molder Fischer Tech in comparison with Memtech.