Valuetronics Holdings

[Drizzt]

Fair value $0.195 leh...

If EPS is around 30 HK cents, dividend payout of 40% EPS will be around 12 HK cents which is around 2 SG cents. That is 10% dividend rate!

Mr Market don't like, but I like.

perhaps you can highlight the sustainability of their cash flow over hardship.

Please elaborate. Thanks.

how would you term their cash flow going by historical experience with a ODM and OEM manufacturer. do you see a drop soon ?

For this, I do not know. But with their cash in hand, very likely they will not required to borrow money anytime soon unless there is a huge order coming in. Then there will be an increase in inventory, increase in receivable and increase in payables. But, that will be good news, isn't it?

---

May I ask what is the economic moat of this company ?
What sets it apart from its competitors?

Who are their nearest competitors?

Revenue seems to have reached a plateau at $2 bil (HK Dollar).
What are the company's strategies to grow it further?

tks.

I afraid that the company don't have any real economic moat to talk about. From my knowledge, their key customers are with them for years, so unless they mess up their own show, likely they will continue to stay with them. So they will grow along with their customers, just like your favourite company. is that consider as economic moat? I don't know.

There are tonnes of OEMs and ODMs in China and other parts of the world, so all will be their competitors. So it back to the above sentence.

As for growth, 2 of their customers are moving their production to Valuetronics factory. This should be positive to them, and should see some result in Q1. They are also looking for new customers in US from various channels. Whether these will bear fruits or not, I shall not comment.

they could be like UMS, look for customers but end up not being able to secure good ones and just burn capital like the licensing business.

we are not worried currently about the dividends, and lets leave existing cash holding aside.

What are the EMS providers that we can compare Valuetronics to in terms of valuation and operations?

Your cash of 221 mil can easily be taken down 100 mil in 1 year due to inventory and receivables buildup which may be written off.

2 bad years and there goes your huge cash hold.

Note that their receivables and inventory size is that big. its not a pluck of numbers out of thin air.