PNE Industries (BDA.SI) - Full Year 2016 Results Update

PNE Industries (BDA.SI) - Full Year 2016 Results Update

Wow the year is almost over. PNE Industries finally released their full year results for 2016. Most of it has come in as expected. The stock has run up from 60c lows to hot above 80c these past few months.

Revenue has remained somewhat flat YoY at 74m. There was a sizeable contribution of 6.7m from the sale of PNE Print which has boosted profits. Excluding this gain, profit for the year would be $9.5m. That's pretty good. It also seems PNE has and will continue to benefit from the depreciation of the ringgit and appreciation of US dollar. Given that Ringgit has recently fallen even more recently and will likely continue to fall as funds move out of emerging markets, we should expect PNE to benefit from forex gains and lower costs of production from PNE's Malaysian factories.

Dividend of 3 cents was announced, including the 5c interim paid out already, 8c from a total of 19.3c EPS comes to about a 40% payout ratio. This is pretty ok for OPMI but somehow doesn't feel as generous as before. Perhaps management is planning to utilize the spare cash for something else.

One thing that sticks out is that PNE has initially announced that USD 7.366m(~SGD 9.94m using a rate of 1.35 as when this report was made) was received as payment for PNE Print with another 1m RMB(~SGD 200k) withheld by Chinese tax authorities. If that is the case, both figures of SGD6.7m as the "gain on disposal" and SGD8.748m as "proceeds from disposal of subsidiary",  do not match up with the SGD 9.94m that was supposed to come into the bank as announced on 18 April 2016. Even taking a lousy rate of 1.2x USD/SGD, at least 9.2m proceeds should have appeared on the books.  This shortfall of a million SGD is either a mistake from the accounting department or some other reason.

In any case, NAV is now 96c and the balance sheet is looking fantastic with no debt and net cash of 60% of market cap, so hopefully there will be some volume to sell into over the next few days and for the stock price to hit NAV.