Powermatic Data Systems Ltd (BCY.SI) - Surfing the 5G wave.

Powermatic Data Systems Ltd (BCY.SI) - Surfing the 5G wave!

Hi guys, in typical tradition, I am back with another review on this stock which I last blogged about 2 years ago! Check it out here. and the previous review which was another 2 years before!! Lol...

Ok so back then Powermatic was trading around 90c (hope you got some :) As usual I wasn't expecting it to do much other than maintain the status quo. However by some stroke of luck, the company has managed to grow its business very fast and it seems for the next few years it will be full steam ahead!

So Powermatic just released it half yearly and results look really encouraging. Share price has adjusted accordingly to around $2.50 at the moment.

A quick look at the latest results shows an increase in revenue to 14.259million, a 64% jump compared to same period last year which was 8.7m. Looking at the last full year results we can calculate the last half years revenue has been 12.254m. This growth is pretty encouraging for such a small niche company like Powermatic.

Earnings for this half year now stands at 16.87c, doubled from the year before. Looks impressive but not surprising considering the high margin nature of the business. And the more hardware they produce, the higher the utilization rate will be which will drive down unit cost. This is often seen in manufacturing companies. The opposite often happens whereby losses can be compounded when production goes down.

Let's see how the valuation stacks up now.
Market cap : ~90 million
NAV : $1.76 (RNAV likely >$2++)
Price : $2.53
Net cash :  34.3 million
Property : 17million (not been revalued, worth at least 30million++ today.)
Dividend yield : 2.77% (5c+2c bonus div or double that this year is not a problem)
EPS : 1H 16.87c, 2H likely 20c with new factory in Malaysia starting production this month)

As a value hunter, I would say Powermatic is near fairly valued now. However, business wise it does seem that it has become a growth company, especially with the global uptake and investment into 5G in the next few years. Powermatic Data has run its course as a value company and now transformed into a growth company.

With full year EPS likely to be at least 35c considering the current growth. Just based on a PE multiple of 12, it will very likely hit a share price of $4.20 or more depending on what results comes out next year. As usual just waiting for a couple of trading houses to publish some glowing reports.

I don't usually gives the thumbs up for a stock but barring a big financial crisis from trade wars, it seems Powermatic Data System is poised for profitable growth and ticks all the right boxes as an investment. Would you be buying in as much as u can at prices today?

[author holds shares in this company]

Powermatic Data Systems Ltd (BCY.SI) - Full Year 2017 Financials.

Powermatic Data Systems Ltd (BCY.SI) - Full Year 2017 Financials.

Hi to the select few readers of my blog. It's been a while since my last blog on this stock  2 years ago when I first started The Blue Fund blog.

Back then the share price was 18c. Powermatic has since gone through a share consolidation of 5 to 1. So a price of 90c post-consolidation. Though it would be nice to put out a short post on how things are going with this company.

It seems the company has not done much in past 2 years. It has managed to improve its property and rents are going ok now and has had some cost savings moving into this property.  As the commercial property market hasn't crashed, the value of it's main property asset is still doing ok.

It's other arm of business producing Wireless and network products is not growing át all but at least is going at a steady pace. Revenue has been flat despite improved global conditions in the past half year.

What's surprising is in the last half year, there have been some realisation of profits from available for sale assets of $3 million, which has not only boosted earnings but also net asset values (NAV). As I had alluded before, this company is going towards more and more of a holding investment company, rather than a technology manufacturing one.


Going forward, it seems boss Dr. Chen Mun will be going back to doing more R&D and leaving the main running of the company to the younger Katherine Ang, which looks like a good thing.

It will also be interesting to see if the company is really working with Google and Uber on some secret project, perhaps some sort of wireless self driving technology which is the buzz with electric vehicles and drones becoming mainstream. Management had alluded to this in last year's AGM.


Of note, the company now has a pile of liquid assets of 25.95million and no debt vs. a market cap of 42million (61.59% of Mcap). Whilst NAV has gone up to $1.51, RNAV is probably in the vicinity of $1.90 now.  Earnings are 8.1c per share at the moment, however they would probably moderate to 5 or 6cents should global business conditions deteriorate in the near term. Co. has a pile of excess cash on hand, perhaps we will see this cash pile reinvested into the above-mentioned projects which management had mentioned last year, it seems like management is not going to return much of that to shareholders in the short term.

For this year at least, management has been pretty generous and has announced a record dividend payout of 7c, an additional 2c to the usual yearly 5c payout. With the recent fervor in tech manufacturing stocks still going strong on the SGX and Tech stocks in general, it seems this big fat dividend payout may be a short term catalyst in pushing up the share price in the near future.There is also a slim possibility that the company could be sold off or privatised as Top 20 shareholders own almost 80% of all the shares.

Now all we need is an analyst from CIMB or someone from The Edge or NextInsight to do an article, fingers crossed!!

[author holds shares in this company]

Powermatic Data Systems Ltd

Powermatic Data Systems Ltd ( P12.SI )

Thought I might just use material from my forum posts to do an article on this stock. Please note at time of writing, share price is SGD$0.18.

Why invest in Powermatic Data Systems?
In the latest half-yearly report, other than net cash of ~16.5m, the other major non-current assets are 19.5m worth of property(yielding 3.9%) and 8.6m investment securities(yielding 5%+). The current distributorship side business is running at breakeven. There is no debt on balance sheet.
Market cap stands at 31m now, so buying P.D could be seen as paying for an investment portfolio of property and shares yielding about 4%+ with a side of free cash. Plenty of margin of safety.

Dividend yield (now 5.5%) has historical stability and though arguably not completely sustainable if we extrapolate the earnings from first half, there is still plenty of cash to distribute over next few years, until either distribution business picks up, or management redeploys the cash during a market downturn buying more securities for more dividend income. There is no need for a cut in dividend as the company has good yielding property and securities as mentioned above contributing to the bulk of the payout.

Most importantly, for such a small cap, is that property asset + the cash of 50% per share provides reassurance that come another financial crisis, it won’t face danger of going kaput, unlike other over-leveraged companies

In the end its just a matter of waiting, for OPMI who wanna invest, for either a rebound in business(pretty unlikely) or a realization of asset value by some sales or further investment using available cash pile.

P.D may not be in the property business as management claims but it definitely is looking more and more like an investment holding company now.

[ Note: Holding long term position ]