Valuetronics Holdings

[wahkao]

good company!

[psslo]

Here's the link to the full report:
http://internetfileserver.phillip.com.sg...140519.pdf

19 May 2014
Valuetronics
Too much Value to ignore. PE ex cash of 4.0x.
SG | MANUFACTURING | ELECTRONICS

Rating:
Trading Buy
Initiate with Trading Buy
TP: 43.0 cents

Company Background

 Valuetronics provides OEM and ODM services via 2 business segments of Consumer Electronics Products (“CE”), and Industrial and Commercial Electronics Products (“ICE”). They have more than 20 years of operations with revenues crossing HK$2 Billion since 2012.

 Established in 1992, Valuetronics has maintained relevance by growing from an integrated EMS provider, towards a premier design and manufacturing partner for the world’s leading brands in the consumer, industrial and commercial electronics sectors. This relevance manifests itself in ~27% and 18% revenue CAGR in both CE and ICE ending FY13, as well as having more than 80% of repeat customers.

 They have grown their product offering from OEM (GSM Wireless Telephone, Cold Chain Temperature Monitor, Thermal Label Printer) and ODM (Baby Monitor, Alcohol Testor, Digitally Controlled Home Appliances) in 2007, to include LED energy saving luminaries and shavers (CE) and transaction printers, GPS, medical equipment and access card readers for (ICE) in 2013.

 CE segment makes up ~70% all revenues and has lower operating profit before tax (OPBT) of ~10%. ICE segment is at present ~30% all revenues and growing, with a higher OPBT of ~17%.

 At present, LED lamps make up ~40% of all revenues, with shavers ~20% of all revenue.

Opportunities

 CE segment provides an earnings base, albeit with cycle volatility, as the whole lamp market will pick up with 1) global recovery (single digit growth); as well as 2) the burgeoning LED lamps revolution product cycle itself. The LED lamp cycle continues to take up market share within the slowly growing lighting market with accelerated sales growth as they continue to render incandescent lamps obsolete – implying a conservative double digit sales growth rate as prices decrease attracting mainstream take up. It is estimated the global monetary value of the LED retrofit market was EUR 190m in 2011 and will grow to EUR 905m by 2016.

 Their efforts to grow their higher margin ICE segment has been encouraging, as evidenced by 2 key ICE customers closing their production in US and China respectively, and transferring all their production to Valuetronic’s facility.

[GFG]

I just sold out all my 700 lots yesterday and today at prices between $0.365 - $0.375
Valuetronics has been a good investment for me, with a return of approximately 52% in less than a year.

Reason for selling out is that it has hit my target price, and that the hype means it is no longer cheaply valued.
Will have to find better areas to reinvest the proceeds.

Good luck for the FY14Q4.
I think the dividends will be at least 13 HK cents.
Based on an approximate 40% payout

[NTL]

I just sold out all my 700 lots yesterday and today at prices between $0.365 - $0.375
Valuetronics has been a good investment for me, with a return of approximately 52% in less than a year.

Reason for selling out is that it has hit my target price, and that the hype means it is no longer cheaply valued.
Will have to find better areas to reinvest the proceeds.

Good luck for the FY14Q4.
I think the dividends will be at least 13 HK cents.
Based on an approximate 40% payout

A nice 50% profit to you. Congrats!

Just to add a little of my opinion. I feel that the hype just started. There will be more upside to come. If the result turn out to be expected, i.e EPS of 40 HK cents, dividend of 16 HK cents, the share price can likely hit 40c or more. Even at 40c, the PE is still less than 4 ex cash, and a decent yield of 6.4%.

Hopefully they will declare a special dividend to rewards their loyal followers.

[GFG]

I just sold out all my 700 lots yesterday and today at prices between $0.365 - $0.375
Valuetronics has been a good investment for me, with a return of approximately 52% in less than a year.

Reason for selling out is that it has hit my target price, and that the hype means it is no longer cheaply valued.
Will have to find better areas to reinvest the proceeds.

Good luck for the FY14Q4.
I think the dividends will be at least 13 HK cents.
Based on an approximate 40% payout

A nice 50% profit to you. Congrats!

Just to add a little of my opinion. I feel that the hype just started. There will be more upside to come. If the result turn out to be expected, i.e EPS of 40 HK cents, dividend of 16 HK cents, the share price can likely hit 40c or more. Even at 40c, the PE is still less than 4 ex cash, and a decent yield of 6.4%.

Hopefully they will declare a special dividend to rewards their loyal followers.

I don't disagree with your estimations ie 40HK cents EPS, potential 16HK cents dividend etc
It may very well go above 40 cents but the MOS has reduced substantially and I can now find cheaper undervalued companies
Share price may keep rising but I am no longer able to predict it with adequate MOS
Still, looking forward to the q4 results

[CY09]

Yup, do agree with NTL that the MOS of this stock is no longer there. I too have divested my holdings at 36.5 cents today, reason being that is my valuation of the company. May be too conservative but who cares!

Still have to thank the forum for letting me notice the stock and listen to the Philips webminar before deciding to invest in it Last June at approx. 0.200-0.205 and obtaining a 1cent plus dividend in the process.

On track for another 30+% gain year

[GFG]

Yup, do agree with NTL that the MOS of this stock is no longer there. I too have divested my holdings at 36.5 cents today, reason being that is my valuation of the company. May be too conservative but who cares!

Still have to thank the forum for letting me notice the stock and listen to the Philips webminar before deciding to invest in it Last June at approx. 0.200-0.205 and obtaining a 1cent plus dividend in the process.

On track for another 30+% gain year

I think u meant that you agree with GFG...
Heh

[NTL]

Yup, do agree with NTL that the MOS of this stock is no longer there. I too have divested my holdings at 36.5 cents today, reason being that is my valuation of the company. May be too conservative but who cares!

Still have to thank the forum for letting me notice the stock and listen to the Philips webminar before deciding to invest in it Last June at approx. 0.200-0.205 and obtaining a 1cent plus dividend in the process.

On track for another 30+% gain year

I think u meant that you agree with GFG...
Heh

Definitely is you.

[noah2013]

Hi GFG,
just curious what stocks do you see as cheaper than Valuetronics now ?
Thanks

[GFG]

Hi GFG,
just curious what stocks do you see as cheaper than Valuetronics now ?
Thanks

I currently hold
Hock Lian Seng
Lion Teck Chiang
Metro holdings
King wan
ICBC (HK listed)

Recently exited valuetronics, and before that, Boustead. Looking to add to these existing companies at a good price when the opportunity arises.
Currently also in the midst of analysing:
Koh Brothers
Hwa Hong
CDW holdings