Avi-Tech Electronics

Avi-Tech Electronics ( CT1.SI )

Avi-Tech Electronics is a provider for Burn-in, engineering and manufacturing services in the semi-conductor & electronics industry. Share price now around 92 cents cum dividend.

Why invest in Avi-Tech Electronics?
Business wise, Avi-tech has improved from loss making due to failed expansion into USA away from it’s core competency. Good try by management but not good enough. Divesting from that business has brought the bottom-line back into the green and a big fat wad of cash. Check out the CIMB coverage in Jan this year which has some detailed info on this stock : click here.

Market cap today sits at 31.5 million. For that, you get 25.72 million in net cash (much of it, 19.42m locked up in a fixed deposits) That’s 81.65% of market cap worth of cash! For another 6 million you get the property and equipment worth >12million and the rest of the business for free.

With so much cash and the company operations now bringing in more, dividends have been resumed. Historically these have been pretty good up until the company started making losses on their USA venture. If payout of 3 cents is maintained at the end of the year, yield would be a good 6.52%.

What I like is that the CEO has done lotsa buy-ins below the 8cent level since Nov 2014 to Jan 2015 before the half-yearly results, which look pretty good now that they are out. Now we know why.

Management may have made a blunder in the US venture but at least they are not paying themselves excessively. Director renumeration stands at less than 600k for the 4 directors.

Given good outlook for a recovering semiconductor sector, even HDD makers like Cheung Woh are starting to make money, Avi-tech will likely remain on the mainboard for some time to come.

[author holds shares in this company]

12/08 - EPS FY3.63c 4Q 0.8c Div 1c. CASH & FD increased to 30.25m. Revenue up.
15/11 - 1Q2016 Results update : EPS 0.5c
26/08 - FY2015 Results update : 0.3c div + 0.7c special div. EPS 0.18c, FY EPS 1.1c.