Stock Review – UCHITEC (7100)

Bursa Malaysia - 7100
Bloomberg - UCHI:MK
Yahoo - 7100 .kl
Webpage - http://www.uchi.net/

Company Profile

UCHITEC is principally involved in Original Design Manufacturing (ODM). UCHTEC specialized in design of electronic control circuit. The main subsidiary Uchi Optoelectronic (M) Sdn Bhd which located in Malaysia mainly involved in design and R&D. While Uchi Electronic Sdn Bhd (Malaysia) and Uchi Technologies (Dongguan) Co. Ltd (China) involved in assembly and manufacturing.

1) Customer Information :

UCHITEC customers can be divided into the following geographical information base on 2016 Annual Report:

i)                  Europe -  99.22 %

ii)               Others – 0.78 %

As from the annual report 2016 99 % of the UCHITEC custormers is from the Europe Region.

UCHITEC consists of two (2) major customers as follows:

i)                  Customer A – 73.17 %

ii)               Customer B – 9.00  %

From 2016 annual report 82.17 % of the sales are from 2 major customers and the largest customer has 73.17 % of the sales

PROS:

è 99 % of the sales are from Europe region and the operation will be in China and Malaysia.

CONS:

è  73.17 % of the sales are from one major customer.

2) Products:

Base on 2016 annual report, UCHITECH main product will be touch screen advance display, high precision light measurement (optoelectronic) equipment and mix signal control system for centrifuge laboratory equipment which make up of 99.22 % of the sales.

Base on Affin Hwang, UCHITEC is the main supplier for fully automated coffee machine module which included Krups, Jura and Nespresso.

Financial Statement

From 2016 Annual Report the short term deposit and cash had increase from RM 174,472,670 to RM 200,760,279. These also increase the cash ratio of UCHITEC from 3.65 (2015) to 3.98 (2016).

PROS:

è UCHITEC does not have any borrowing from bank.

CONS:

è Increase of provision for rework and warranty from RM 450,000  to RM 2,013,823

Although the account receivable for 2015 and 2016 is almost the same, in 2016 there is increase of trade receivable that past due which is RM 2,408,695 for 2016 compare to RM 465,289 for 2015. 22 % of the trade receivables recorded in 2016 had past due.

UCHITEC is a debt free company. In 2016 there is an increase of provision for rework and warranty from RM 450,000 to RM 2,013,823.

PROS:

è Cash Ratio of UCHITEC had increase from 3.65 to 3.98

CONS:

è 22% of the trade receivable had past due in 2016

Dividend and Bonus Issued for the past five year

UCHITEC had issues a bonus issue of 1 bonus share to every 10 existing shares on 10 Jun 2016.

UCHITEC had constant dividend for the past five year from 2012 – 2016 with the dividend yield of 6.4% after adjustment of the bonus issued

PROS:

è UCHITEC pay dividend constantly è UCHITEC had 5 year dividend yield of 6.5% after adjustment of the bonus issue

Summary of Stock Reviews

Stock Review – HOMERIZ (5160) Homeritz Coporation Berhad

Bursa Malaysia - 5160
Bloomberg - HMCB:MK
Yahoo - 5160 .kl

Webpage - http://www.homeritzcorp.com/

Company Profile

HOMERIZ is an integral designer, manufacture and exporter of a complete range of home furniture.

1) Customer Information :

HOMERIZ customers can be divided into the following geographical information base on 2016 Annual Report:

i)                  Asia and Pacific -  54.42 %

ii)               Americas and European Countries – 41.49 %

iii)            Africa and Middle East – 3.10 %

iv)            Malaysia – 0.99%

As from the annual report 2016 only 1 % of the 2016 revenue are from the Malaysia’s customer. Hence the weakening of Ringgit Malaysia will benefit HOMERIZ.

HOMERIZ consists of two (2) major customers as follows:

i)                  Customer A – 12.64 %

ii)               Customer B – 10.19 %

PROS:

è Able to benefit from the weakening of Ringgit Malaysia as 99% of the revenue are from country outside Malaysia and denominated in US Dollar.

CONS:

è HOMERIZ consists of two major customers which contributed to 22.83 % of the total revenue.

2) Factories:

Base on Mr Chua Fen Fatt, managing director told to the Edge Financial Daily on the earlier of the year, HOMERIZ operates six factories located in Muar, Johor.

Financial Statement

From the annual report 2016, there is goodwill of RM 478,506. These goodwill is tested for impairment annually. The 2016 discount rate for cash flow projection of is 8.10 % and growth rate of is 6.5 %.

The trade receivables of HOMERIZ had reduce from RM 8,622,706 to RM 3,715,977 while the revenue had increase from 146,418,585 to RM 157,566,985 hence the receivable turnover ratio had reduces from 0.055 to 0.024. These will result the days of saleoutstanding to reduce from 20 days to 9 days. Besides that the trade receivable had reduce from 25 % to 17 %.

PROS:

è Days of Sales Outstanding had reduced from 20 days (2015) to 9 days (2016) è Trade receivable past due had reduce from 25 % (2015) to 17 % (2016)

CONS:

è RM 478,506 of goodwill. Dividend HOMERIZ had pay dividend constantly throughout the year. For the past 5 years (2012 – 2016) HOMERIZ had pay an average dividend RM 0.037 which is around 4% dividend yield. PROS: è HOMERIZ pay dividend constantly è HOMERIZ had 5 year dividend yield of 4% Warrant Base on 2016 annual report there are still 49,990,000 warrant remaining. The warrant had exercise price of RM 0.92 with the exercise ration of 1:1. The warrant had an maturity date  0f 09 July 2020. Industry Comparison - Furniture Summary of Stock Reviews