AEM - Q3 2020

AEM Q3 PERFORMANCE

Let's look at AEM Q3 results. 

For Q3' 2020, revenue increased 93% compare to same quarter last year and it increased 85.7% for 9M 2020 and net profit is double of last year. Impressive result!!!! So, what's segment bring in the most revenue and profit? Let's take a look. 

From the table, we know that ESS brought in the most revenue, 422 millions followed by SLT-I , 5.3 mil and MEMS, 4.9mil. There is a huge demand for ESS and MEMS. 

Outlook

Management increase the revenue target from 500mil to 520mil.

With the SLT+ vision, AEM offer a full suite of application. 

For Q4 2020, will invest 2mil to R&D. 

Financial calculation.

Assumed FY 2020 able to achieve 520mil with profit margin 16%

Net profit = 83mil.

EPS = 0.305 

Total equity = 200 mil (assumed)

ROE = 41

P/E = 3.55 / 0.305 = 11.6

Opinions 

If AEM able to achieved the target 520mil and margin is 16 percent, the ROE will be 41 and P/E at current price is 11.6. For technology stock, P/E 11 consider low. 

Pros - Net Cash company, 5G and automation is the trend. 

Cons - Too rely on one company, Intel contributed the most revenue. 

UMS (18 Oct 2020) - Share Price 1.02

 Core Segment

91% from semiconductor.

Geographical contribution of Revenue

Financial performance

Income statement

Revenue increased 28% percent despite Circuit breaker moment. 

Raw mat and subcon charges increased 129% !!! If Raw mat increase, it might means that Q3 business is good, that's the reasons company bring in more raw mat. But if increase is sub-con charges, then is different meaning. Anyway, not much info in the QR. 

Balance Sheet

Cash increased 19mil. As I've mentioned previously, if the inventories were increasing it might means that next quarter sales should be good. But seems like the inventories were remain the same. 

Goodwill contributed 26percents of total Assets. Must take note of this. 

Bank borrowing drop 2mil and retained earning more than capital. 

Cash flow

Operating cash flow dropped 7mil because of increase in trade receivable and decrease in inventories. 

Cash and equivalent increased 28mil. But cash and cash equivalents in balance sheet drop 11mil? 

Prospect

Management is confident that will remain profitable in 2020 and SEMI has projected there is a increase in demand. 

Conclusion:

Semicon company is high cyclical company. If SEMI demand drop, this company will highly impacted and more than 91percents of revenue from SEMI. The only good thing for this company is net cash company and the demand for SEMI is increasing. 

GDP: 50

PRC: 75

DCF value: Actual .778 / half .693

Hong Leong Industries - HLIND (Share price - 7.47 - 24 Sep 2020)

Core Business

- Consumer products: Manufacturing, assembling and distribution of motorcycles (Yahama), scooters and related parts and products, manufacturing and sale of ceramic tiles as well as distribution, trading and provision of services in marine related products.

-  Industrial products: Manufacturing and sale of fibre cement and concrete roofing products.

Financial

Segmentation 

-  From the above table, we can clearly see that consumer product bring in the most revenue. Consumer product included - Yamaha motor and ceramic tiles. Whereas the loss generated from industrial product - fibre cement and concrete roofing products.

Geographical information 

The main country for the company to focus on is in Malaysia, 90% of the revenue is from Malaysia. 

Year 2020 Performance

Revenue dropped 8.5% and PAT dropped 39% !!! This is due to MCO and lower profit for associated company. But this company still a cash rich company with cash - 1.2billions. 

Prospect 

Sound like management team not expecting grow for next quarter as well. 

Financial performance year 2020

EPS - 0.5392

P/E - 13

ROE - 13.50 

GDP - 50

PRC -  60

My thought - Company highly impacted by Covid- 19 but I believed that it will slowly recover. 

Frencken (22 Sep 2020) - Share Price 0.945

Core business

Mechatronic Division

Frencken designs and manufactures high precision and complex systems for renowned global Original Equipment Manufacturers in the healthcare, analytical & life sciences, semiconductor and industrial automation markets

IMS Division 

Frencken offers integrated contract design and manufacturing services to the automotive and consumer & industrial electronics segments

Business Segment 

For 1H2020 performance 

Revenue dropped 9.6percents and profit dropped 6.1%.

Automation segment dropped 34.1% due to lower shipments on the storage drive equipment to a key multinational customer.

Automotive markets were affected by measures implemented by the respective governments to contain the spread of Covid-19 and an overall slowdown in end-user demand

Business Outlook 

Management team believed that 2H20 semicon, medical , automation and automotive segment revenue will be better than 1H20.

PRO: 

1) I've audited this company in year 2018, my impression for this company in bangi is good. Well manage and systematic. 

2) eco-PVD method is good but not sure how many customer will look for this. 

3) Business diversify is good , at least will not get serious impact if one of the sector in down turn. 

Cons

1) In machining field, the price is competitive and supplier will reduce the price in order to get the business. 

2) IMS business it keeps going downward. Even though the profit is up but the revenue is going down hill. 

Financial performance 

Issued Shares - 424,922,409

Net Profit - 18,641,000

EPS - 0.043 - for (1H20)

CAGR Profit (2013 - 2020) - 5.63 %

Current price - 0.945

Intrinsic - 1.057

MOS - 10.59

GDP scoring - 75

PRC scoring - 75 

Kim Loong (8th Sep 2020) - EP 1.40

 Main Area

1) Plantation Operation

2) Milling Operation

LandBank -  Plantation 15,826 hectares

Operation

Johor (Kota Tinggi)

- Palm oil mill (100MT FFB/HR) 

- Oil Palm Estate (1,133 Ha)

Sabah (Telupid)

- Palm oil mill (60MT FFB/HR) 

- Palm Oil Estate (1,996 Ha)

Sabah (Keningau)

- Palm oil mill (90MT FFB/HR) 

- Palm Oil Estate (7,191 Ha)

Sabah (Sandakan)

- Palm Oil Estate (2,731 Ha)

Sarawak (Sg.Tenggang/Kranggas)

- Palm Oil Estate (10,471 Ha)

General Info

• 1 acre is generally planted with 55 palms. 

• 1 hectare is generally planted with 135 palms. 

• 1 acre of mature palm can generally produce an average 0.8 MT of Fresh Fruit Bunch/month. 

• 1 hectare of mature palm can generally produce an average 2 MT of Fresh Fruit Bunch/Month. 

• 1 Metric Ton (MT) of Fresh Fruit Bunch (FFB) can generally produce 200 kg or 20% of Crude Palm Oil (CPO) and 50kg or 5% of Kernel

>> Malaysia National FFB - 17.2 MT/Ha

>> Malaysia National CPO - 3.47 MT/Ha

Calculation:

Unit cost of production - RM1600 / MT CPO

15,826 * 1MT (conservative) = 15,826 MT FFB/month

15,826 MT FFB * 15% = 2373.9 MT CPO/month

2374 MT * (RM2400 -RM1600) =  RM1.9 million / month        

Conclusion:

Kim Loong had acquired 2862 acres in sabah, it will continues to bring revenue to the company.

Pros- From the figure, we can see that extraction rate of CPO and PK is way above Msia standard. 

Biodiesel generates another revenue to the company, Indonesia is encouraging on B30, it will place a cushion on the CPO price. 

Net-Cash company

Cons- This company very depending on the CPO price, if CPO price above Rm2k, it will benefited.

High Capex company. 

Micro-Mechanics (19 Jul 2020) - Current Price (SGD 1.85)

Business

Designs, manufactures and markets high precision parts and tools used in process-critical applications for the wafer-fabrication and assembly processes of the semiconductor industry.

Quarter Q1 ~ Q3 2020

Income statement

In Q3, other income increase 281% due to government subsidy and exchange gain. 

Renenue for 

2017 Q1 to Q3 = 41.8mil

2018 Q1 to Q3 = 49.4mil

2019 Q1 to Q3 = 46.4mil

2020 Q1 to Q3 = 47.8mil

Balance Sheet

In YTD 2020, receiveables equals to 12mil, 12mil/ 47mil = 26%. Need to take note of this. 

Share capital 14mil and accumulated profit is 39mil, is a good sign. Meaning that company keep earning money.

Cash flow

Generous company, CFFO 12Mil and giving out 15mil as dividend. No worries, this company still cash rich. 

Final thought

Pros

1) Is a cash rich company

2) Pay dividend company, net profit margin > 15% and ROE >20%

3) 5G and AI is future - more and more precise chip needed and tooling is required to do this. 

Cons

1) Electronic company is very fluctuate

Assume EPS for year 2020 - 8.00 cents

Price = 1.85/0.08 = 23

Seems like this P/E is abit high.