At the last closing price of 51.0 cents per share, Spindex has a market capitalization of $58.8m. Due to the small market capitalization Spindex only needs to do half-yearly reporting. It released its FY14 results on 26 August 14.
FY14 results
Revenue, gross profit and profit before tax increased by 6.0%, 17.4% and 26.5%, respectively. Profit before tax of $11,014k ($6,109 for 1H14) and revenue of $98,151k ($48,992for 1H14) translates to a PBT margin of 11.2%, which is much higher than that of PCI, which was discussed in my earlier post. It has cash and fixed deposit of $26,334k and borrowing of $458k; hence, net cash is $25,876k. With 115,365,000 issued shares, net cash per share is 22.4 cents. Net cash flow from operating activities is $14,454k and $11,104k was spent on purchase of property, plant and equipment. At least part of the capital expenditure may be related to Spindex’s new joint venture Spindex Energy Services. EPS for FY14 is 8.02 cents and NAV is 64.63 cents. PER is 6.4 and P/B is 0.79. It raised dividend per share from 1.8 cents in FY13 to 2.2 cents, which translates to a yield of 4.3%.
With regard to the Joint Venture, announcements released on 9 December 2013 show that Spindex entered into a 70:30 joint venture company called Spindex Energy Services Pte Ltd with JF Industries to provide services of precision CNC machining in the oil and gas industry. Spindex Energy is incorporated with a paid-up capital of S$500,000 divided into 500,000 ordinary shares. Spindex has agreed to grant Spindex Energy a convertible loan amounting to an aggregate principal amount of up to a maximum of S$5 million.
2014 AR
Here are some useful information found from Spindex’s2014 Annual report:
- It acquired the land and factory building adjacent to its Malaysian plant in FY2013and has completed the refurbishment of the building as well as upgrading its production facilities. This additional production capacity will allow Spindex to reallocate resources more efficiently across the various plants in the region so as to achieve higher levels of productivity.
- Spindex Energy has commenced operations and is working on some initial product development with potential customers.
- The nature of Spindex’s business subjects it to macroeconomic variables such as foreign exchange volatility, pricing pressure and changing input costs. In view of the prevailing uncertainties in our operating environment, it maintains a cautious outlook for FY2015.
- Executive Chairman Tan Choo Pie and Managing Director Tan Heok Ting’s remuneration fall in the range of $500,000 to $749,999.
- Its leasehold properties have remaining leases of between 16 to 20 years, including its leasehold property at 6 Neythal Road.
- Spindex’s largest shareholder is Tan Choo Pie, who owns 28,175,670 shares, which is 24.42% of total number of issued shares.
- SC Fundamental Value Fund holds 5,992,006 shares of the companies compared to 6,133,460 shares reported in FY13 AR.
- Yeoman Capital Management was reported to hold 5,775,000 shares in FY13 AR but its stake has been reduced to less than 5.0%.
Conclusion
Spindex’s business continues to generate good cash flow and it has achieved new records in terms of revenue and profit in FY14. It remains to be seen if the growth will continue as the Management is cautious over its business prospect in FY15. It is worthwhile to take note that the Management has always been conservative in commenting on its propospect. It is interesting to watch its new JV Spindex Energy will be able to contribute meaningfully to its top and bottom line. Spindex is a decent stock to own but it is worthwhile to note that its share price has more than doubled since January 2012. I have a modest position in Spindex but I do not find its valuation to be attractive to increase my stake.
No comments:
Post a Comment