InnoTek

[Life is a game]

All these talks are based on assumption that mgmt will do share buybacks, realise their investment assets etc. Low PE does not mean anything. Buying shares of a company with assets equivalent to market cap also mean nothing. the reason is because we cannot decide the company direction at all. if they choose not to give anything back we got to respect unless you are WB and hold a significant stake in the company.

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[kelvesy]

Based on 1H results, InnoTek has 15.816m in "held for trading financial assets" and 31.222m in "cash and short-term deposits. As for debt, it has a finance lease of 61k (both long and short term). This means the net cash position of the company is 46.98mil approximately.

The company has another $19.2m in investment properties. If you add that in, the net cash + investment property is almost equal to the market cap (ie. the EV is almost 0, or the business is free). During the last AGM, the Board has expressed that it is cognizant of this huge non-operating assets. I think this is a huge comfort to minorities holding on.

I do not rule out the chance when shrewd private equity would come in to acquire them...

Gazelle Capital (Lim Say Hui of Lindeteves Jacoberg, now known as Brook Crompton) did come in. IIRC, they tried to work something out with the Chandaria's a few years ago, but got nowhere.

Don't think you should calculate that because the company needs that when the production picks up and for existing operations. There are immediate corporate actions that management can do to enhance shareholder's value. I hope that the management is reading our posts. Like what "Life is a game" mentioned, it's nothing if they don't do anything. I believe mgmt should allocate capital on per-dollar basis and may the best returns win the right for its usage.

Thanks, I noted Gazelle Capital is still a shareholder. They were comtemplating between July to Oct 2014. 

My personal opinion is that Innotek should not have hired an investment bank manager to manage its 15 mil securities. A reason is because it seems the investment manager has not been performing to par.

The second reason is that Innotek can deploy the cash for better uses and that includes doing share buybacks of its own shares or using it as a cash buffer. The fact that you can buy Innotek assets of NAV 55 cents at a price of 35 cents, point to a potential 50% gain. From a business acquisition perspective, you are buying a business which is generating about 8% FCF yearly; much better than putting your 15 mil with an investment banker who is unlikely to provide you 8% returns after fees.

Absolutely! Right now, its equity stands around $124.82mil, assuming we are taking out the "trading of financial assets" 15.816m, we are left with 109mil.

Utilising the 15.816m to purchase back our shares at $0.30 each, it will shrink our outstanding shares available (excluding treasury shares) to be 171.405m. Taking equity of 109mil divided by 171.405m outstanding shares, you will get 0.64cts NAV. As compared to current 55.7cts NAV, it is a boost of 14% as well.

Assume InnoTek's management is capable to turn operations around, buy its own shares on cheap now. When operations turnaround, shares are up, maybe InnoTek can consider to par down some treasury shares to insitutional investors? Starburst, China Sunsine, AEM, all did that. I'd say that is smart use of capital because this shows the mgmt clearly knows how to exploit the situation.

[mslee888]

I rather have the management focus on running the biz efficiently and optimally. This is where the real cash flow will come in and ultimately build shareholder value. The recent qtr showed cash generation is weak. The cash and its investment securities will come in handy when the company needs to expand or invest in production lines if their customers have new programs for them to build. Share buyback is only good if the company has a lot of cash and doesn't need it for their business expansion. I doubt Innotek is at this stage.
But I do agree the investment securities portion return is too pathetic. Probably the investment manager is too risk averse and puts too much of it in bonds?

[kelvesy]

A day ago, I exchanged email with the IR of InnoTek.

"The Company is likely to hold an analysts and investors meeting after the 3rd Quarter 2017 results announcement in November and we would include you in the invitation list." This was the reply I got.

I think the willingness of InnoTek's to host an investors meeting means they are conscious about the need to improve their corporate profile among the investing community. I have no doubt that management is doing its best to grow the business, let's just hope the best for the operational side of the company.

Focus on growing cash, receiving money faster and do higher margins business.

[kelvesy]

As a vested shareholder, today's movement was slightly unusual. Spike in volume but no price change. Seems like sellers are aplenty but buyers are not letting up as well. Wonder if there's anything brewing? I still secretly hope that the management ditch its financial assets portfolio and revert back to cash and buy back its shares.

12 Sep: https://imgur.com/a/bPreq
13 Sep: https://imgur.com/a/5CIGQ

[mslee888]

3RD qtr results are out but no mention yet of analyst briefing.

Business showing signs of stabilization after a disappointing Q2. Hopefully Q4 can be even better.

For investors in for the long haul, prospects should be good with new OA and automotive programs coming in from 2018 and 2019.

[sgmystique]

3RD qtr results are out but no mention yet of analyst briefing.

Business showing signs of stabilization after a disappointing Q2. Hopefully Q4 can be even better.

For investors in for the long haul, prospects should be good with new OA and automotive programs coming in from 2018 and 2019.

I hope you had the chance to attend the Analyst Briefing today!

[GenS70]

source :    https://www.theedges...coming-fruition

Restructuring efforts for this tech manufacturer coming to fruition
By:
Michelle Zhu
10/01/18, 12:30 pm
SINGAPORE (Jan 10): CIMB Research is highlighting precision metal components manufacturer InnoTek as a potential stock to watch as the group’s financials improve on the back of restructuring efforts in recent years.
The group has been restructuring since FY12, during which it slipped into a net loss of $18.4 million due to a combination of lower revenue arising from political tensions between China and Japan, as well as the commencement of its restructuring and consolidating efforts.
In a Tuesday non-rated report, analyst William Tng notes that the move, along with a change in management, has led to the return to positive net profit since 2Q16, with the company resuming payment of dividends in FY16.
“As at end-Sep 2017, InnoTek was in a net cash position of $31.9 million [or 37% of its market cap]. InnoTek did not pay any dividends in FY14 and FY15 but paid a dividend per share (DPS) of 0.5 cents in FY16. The company has not announced any formal dividend policy. In FY12 and FY13, it paid DPS of 1 cent,” comments the analyst on the group’s balance sheet.
The group’s book value of equity per share (BVPS) as at end-9M17 was 57.5 cents, with a historical price to book value (P/BV) of 66 times based on its share price of 38.5 cents at the close of last Friday.
Tng also highlights the significant experience of the group’s new CEO Lou Yiliang in the customer electronics sand home appliances business in Asia.
“On 1 Mar 2017, Mr Lou was appointed CEO of InnoTek. Mr Lou has been purchasing shares from the open market over April to July 2016,” notes the analyst.
“Mr Lou’s strategy was: to further drive cost efficiencies; to improve the group’s skill sets and use of technology, noting that the group had fallen behind peers in capabilities such as mould making, machining and line management skills; and to personally drive customer engagement efforts,” he adds.
Looking ahead, InnoTek expects its Mansfield Weihai subsidiary in the printing & imaging segment to benefit from the printer business of Hewlett-Packard via its Samsung printer business acquisition.
The group’s new Thailand plant under the office automation business is anticipated by its management to commence production in 2H18 and gather momentum in FY19F onwards – while it also intends to pursue more programmes and orders for car seat moulds and stamped products under the automotive segment.
“In the TV segment, InnoTek reported that the market response for its aluminium heat sink for TVs has been positive. InnoTek expects the TV segment to remain a significant revenue contributor given growing consumer demand for high-definition TV panels with thin but strong bezels,” says Tng.  

My own thoughts on Innotek:

The new management team comprising of Lou and Kuang has quickily turnaround Innotek, if they can be retained by Innotek to run it for the next 3-5 years I feel that we are in good hands. It is good to know that Lou owns > 5%, he has adequate skin in the game.

The next important thing to note for me is Innotek (which previously has no relationship with HP) has been selected to be HP supplier after HP acquired the Samsung printer operations. Based on my own research, HP is acquiring this business to help them gain market share in the A3 Multi function printer segment (think the big office copier/printer), HP will likely be able to retain in the foreseeable future the market share in Korea as they have licensed the "Samsung" brand for sale in Korea, the optimistic case will be HP able to use this platform to break into the A3 MFP market into other geographical region. 

For Innotek apart fm new business for a new customer HP, it will hope to ride on HP growth in its A3 MFP market and at the same time, due to how Koreans work, it is likely that Samsung is using Korean metal stampers previously, hence HP seek out non Korean metal stampers to provide alternative supply, in the optimistic case, Innotek may be able to garner more allocation at the expense of existing Korean suppliers.

On a separate note, it is interesting to note that Innotek is chosen as a non Korean supplier to diversify HP newly acquired printer business' suppliers, it could be chosen due to Innotek's strong track record with its Japanese A3 MFP customers like Canon, Ricoh and Kyocera and its competitive pricing versus the korean suppliers. I personally will see it as some form of testament of Innotek's capabilities in this business segment!

[MOV]

FY2017 results are out and summarize below a few important points:

1. Full year revenue dip 1% marginally to $212.682m (FY2016: $214.740m). Credit must be given to management for managing to secure new programmes and customers despite the relocation of Japanese clients to Thailand.

2. Net profit drop 15% to $9.832 (FY2016: $11.569m). However take away the one-offs (forex and reversal of deferred tax asset), MSF Group at the operational level actually recorded an increase in net profit of $12.282m (FY2016: $12.081m).

3. Dividend declared for full year increased to 1.0 cents (FY2016: 0.5 cents). Cash and financial assets has built up nicely to $50.58m, slightly more than half of market cap. No debt, free cash flow positive.

4. NTA is now at 59.8 cents .

Going forward, next FY2018 shareholders should be excited and look forward to:

1. New automotive programmes starting, management indicated to grow this into key revenue.

2. TV sales are still growing.

3. Thailand plant start-up and therefore Office Automation sales will revert back to normal.

4. New Hewlett Packard printer business to scale up, management indicated audit has cleared and all ready to go.

Seems like all the stars are aligning for a great year ahead!

(Not a recommendation to buy or sell, just stating facts)

[lanoitar]

Para 12 of the FR was most interesting:

The Company had, on 1 February 2018 received a requisition (“Letter”) from Gazelle Capital Pte. Ltd. (“Gazelle”), a substantial shareholder of the Company, holding 14,082,700 shares representing 6.28% of the Company’s share capital pursuant to their right under section 183 of the Companies Act, Cap. 50 (“section 183”) for a resolution to be moved at the forthcoming annual general meeting (“AGM”) of the Company on 25 April 2018.
Gazelle has requested for the resolution to declare a one-tier tax exempt dividend of 7.5 cents per share for the financial year ended 31 December 2017 to be moved at the AGM. The reasons given by Gazelle are set out below...

After careful deliberation, the Directors propose a dividend of 1 cent per share for the present financial period.
The Board will provide their response to Gazelle’s proposal in the Explanatory Note to the Resolution relating to the
requisition received from Gazelle to be included in the Notice of AGM.