InnoTek

Hi All

I am looking at InnoTek and Amtek Engineering...wondering which one is a better BUY...

Any views pls?

Yield looks pretty attractive...

(28-05-2012, 01:57 PM)Stockerman Wrote: Hi All

I am looking at InnoTek and Amtek Engineering...wondering which one is a better BUY...

Any views pls?

Yield looks pretty attractive...

If both are equally good, then invest in both, instead of force yourself to select only one of them.

The view is not from me, but from a follower of Peter Lynch theories.

Hey buddies, anyone here has knowledge in the business of Innotek?

In precision engineering, how does Innotek compete in the global market? Any special technology do they have?

Hope to hear your views!

IIRC Innotek was loss making in 1Q 2012 while Amtek reported decent profits and a surprise interim dividend ?

(28-05-2012, 03:07 PM)Nick Wrote: IIRC Innotek was loss making in 1Q 2012 while Amtek reported decent profits and a surprise interim dividend ?

At the glance into the 2 stocks, it seem Amtek is better than Innotek.

Base on the statistic provided by my tool

Amtek : ROE 20% ROA 7%
vs
Innotek : ROE -10% ROA -6%

Dividend Yields (ttm) are good for both 13% (Innotek) and 12% (Amtek).

I know little on Amtek and Innotek. But let me give my view on precision engineering biz

IMO, In precision engineering companies, the competitive edge fall on the process engineering skill. Precision and consistent product are the keys to meet customers requirement.

IMO, the long-term customers are the key indicator for a successful biz.

(28-05-2012, 03:31 PM)CityFarmer Wrote:

(28-05-2012, 03:07 PM)Nick Wrote: IIRC Innotek was loss making in 1Q 2012 while Amtek reported decent profits and a surprise interim dividend ?

Dividend Yields (ttm) are good for both 13% (Innotek) and 12% (Amtek).

Amtek dividend yield isn't 12%. Based on its historic DPS of 5.5 SG cents, the dividend yield is 8.6%. Since 9M 2012 earnings isn't as great as the previous year, it is likely the dividends will dip slightly. Unless I am mistaken, the highest yielding profitable precision engineering firm is UMS but obviously it comes with its own set of risk. Micro Mechanics also have a decent 7+ % historic yield. I guess it is the norm for such firms to pay out good dividends due to their strong cash-flow ?

(28-05-2012, 03:45 PM)Nick Wrote:

(28-05-2012, 03:31 PM)CityFarmer Wrote:

(28-05-2012, 03:07 PM)Nick Wrote: IIRC Innotek was loss making in 1Q 2012 while Amtek reported decent profits and a surprise interim dividend ?

Dividend Yields (ttm) are good for both 13% (Innotek) and 12% (Amtek).

Amtek dividend yield isn't 12%. Based on its historic DPS of 5.5 SG cents, the dividend yield is 8.6%. Since 9M 2012 earnings isn't as great as the previous year, it is likely the dividends will dip slightly. Unless I am mistaken, the highest yielding profitable precision engineering firm is UMS but obviously it comes with its own set of risk. Micro Mechanics also have a decent 7+ % historic yield. I guess it is the norm for such firms to pay out good dividends due to their strong cash-flow ?

The reported dividend yield from the tool is Dividend yield (ttm) = 12.0% while Dividend yield (Annual) = 8.5%. It seem we are quoting slightly different data.

Since there is a difference, Amtek is paying more than one (1) dividend per year. Rationally speaking, it seem that the dividend yield is increasing? I hope my rational skill working and the tool i use is functioning

It may not be wise to use trailing 12 months dividend yield since it will include both 4Q 2011 dividend and 3Q 2012 dividend. Historic annual yield will paint a better picture. In any case, it is still pretty high yield since it exceeds 7%.

(28-05-2012, 04:13 PM)Nick Wrote: It may not be wise to use trailing 12 months dividend yield since it will include both 4Q 2011 dividend and 3Q 2012 dividend. Historic annual yield will paint a better picture. In any case, it is still pretty high yield since it exceeds 7%.

Amtek having a irregular dividend paying timing, one in 4Q11 and one in 3Q12? I assume it is one-off, not regular one.

Yes, i agreed. It is not wise to use ttm value for Amtek with an irregular dividend paying timing. Annual dividend number is a better number to use.

which is a better play? Amtek Engr or InnoTek? which will have a higher sustainable dividend yield over the medium term say next 2 to 3 yrs?

tks for sharing views..


*****

DBS Vickers upgraded precision engineering firm Amtek Engineering Ltd to buy from hold and raised its target price to S$0.82 from S$0.75, citing better than expected quarterly earnings.

Shares of Amtek were 1.6 percent higher at S$0.65 and have gained 10.2 percent since the start of the year.

Amtek said its third quarter net profit fell 21 percent to $7.8 million from a year ago but this was higher than DBS's expectations due to stronger than expected sales in all business segments.

Near term earnings are expected to improve, helped by a recovery in the hard disk drive segment and better margins, DBS said.

Amtek also announced a surprise interim dividend of 2.3 Singapore cents. DBS said it expects Amtek to declare another dividend for the next quarter, lifting its dividend payout ratio to 55 percent from 50 percent.

--------------------------------------------------------------------------------
let's say full year EPS for Amtek = 6.2 USD cents.

55% = 4.3 cents ( 1 USD - 1.25 SD)

4.3 over 64.5 cents is only 6.7% of dividend yield...