Fu Yu Corporation

I've been vested with Fu Yu for a number of years now.

With the stock price going up so much, its attracted a lot of attention. However, I would argue that the business is sub-par at most, and that with Fu Yu trading at close to book value, the MOS has decreased substantially. At 8+ cents it was a huge discount to its liquidation value. Current price of 19.5 cents is almost close to its book value.

Disclosure: Vested but looking to divest soon.

(01-04-2015, 06:46 PM)yawnyawn Wrote: Fu Yu has net cash of $88M against market cap of $94M. Made $11M last year.

Comparing against similiar companies like Sunningdale and Fischer Tech, it has a cheaper valuation if cash is stripped out. However, it does not pay a dividend like the other two companies.

Did i see a bargain here or i missed something out?

(recently vested)

Net cash increased to $94M as of 1QFY15's results. Against market cap of $140M($0.190), an investor is paying $46M for the company.

In 2014, Fu Yu made $11M and in just 1QFY15, it made $4.5M. Fu Yu is trading at 4x earnings(ex-cash) using FY14 earnings.

Company has signaled that it intends to pay dividends going forward after the capital reduction exercise. Hopefully, a $0.01 cent payout will be able to attract more investors to come on board. This will cost the company $7M annually but with the $94M net cash on hand, i think company is in a comfortable position to dish out higher dividends.

Company's main customers are Venture and HP which are stated in the recent RHB's report.

(vested)

http://rhbosk.ap.bdvision.ipreo.com/NSig...b2ecc0737a

RHB maintains $0.30 target price in their report entitled "Treasure Chest Unlocked".

The coming quarter's announcement will determine whether share price can breach $0.20 in my opinion. Akan datang

now time to relook again given it is trading at 1x PE ex cash of 13ct net cash??? check out the privatisation offer by Shaw Kwei & Partner for Chosen, another plastic precision engineering company, at 17.4x FY6/15 earnings and 1.0x P/B, Fu Yu is very attractive especially given that it has started paying dividends

Agree that it is worth a re-look as it has been beaten down recently and lower oil prices should be a net positive.
Downside risk is probably limited somewhat.


(Not vested, but watching)

3Q2015 results is out - http://infopub.sgx.com/FileOpen/Fu%20Yu_...eID=377934

Revenue -18% due to reduced orders from China and Malaysia.
Net profit +22% mainly due to forex gains and better gross profit margins from better cost management and utilisation of facilities. 

Against current market cap of $122M, Fu Yu still has $100M cash with nil bank borrowings after paying the 1st interim dividend. For 9M2015, Cash flow generated from op. activities is $24.9M and free cash flow is $19.5M.

A second interim dividend of 0.25 cents has been declared plus the first interim dividend paid out, a total of 0.50 cents has been paid.

Company is very conservative if they do pay out a total of 1.0 cent dividend this year($7.53M) which is only 40% of 9M FCF and a dividend yield of 6.3%.

Going forward, the management has said that they expect business to trend downwards due to slowdown in China and Malaysia so i believe they are just being cautious here by keeping a high level of cash.

(Vested)

Typical of several SGX mfg companies with depreciation at 13.7 million but capex at only 6.3 million, i.e. industry is not bullish, and management is cautious. Nevertheless, overall operating cash flow of 30 million is very healthy (vs mkt cap of less than 110 million) which can easily fund 2 cts per year of dividends. Keep it up ok boss?

Market doesn't like 1q16 results and sold down today.

[Revenue
The Group’s revenue decreased by S$6.1 million or 10.4% from S$58.1 million in Q1 2015 to
S$52.0 million in the current quarter under review. The decrease was mainly from China
segment where we saw significant decrease in orders and demand from certain customers in
Q1 2016 as compared to Q1 2015. The decrease in revenue in China and Singapore
segments was partially offset by the increase in revenue in Malaysia segment.]

lower USD and forex losses has also made a big dent to earnings. 1Q EPS 0.13c. 

Looks like slowdown in China is wide reaching. Probably Fischer and Sunningdale will be affected too. The recent boom in the electric car industry in China should also be coming to a halt as frauds have been uncovered regarding the gov subsidies and the China gov has started cutting subsidy since january.

A drop about 0.5ct earnings to 0.13ct(YoY) is very significant.
It represents the quality of customers they currently serve.
However they do have a relatively large cash horde to provide some form of stability.
At this juncture, downside risks is increasing.
Looking back, it had been a very good and sharp ride up from ard 10cts to 20cts
Those who followed the turnaround and invested would have made some decent gains.

(16-05-2016, 07:15 PM)Big Toe Wrote: A drop about 0.5ct earnings to 0.13ct(YoY) is very significant.
It represents the quality of customers they currently serve.
However they do have a relatively large cash horde to provide some form of stability.
At this juncture, downside risks is increasing.
Looking back, it had been a very good and sharp ride up from ard 10cts to 20cts  
Those who followed the turnaround and invested would have made some decent gains.

Pls read thro' the report in greater details before making sweeping comments.
The fall in eps was due to FX losses. it has nothing to do with the operation or the quality of the customers.