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DANCOMECH
SERVING THE GLOVE BIG BOYS,
PROCESS CONTROL EQUIPMENT DISTRIBUTION,
SINGAPORE JURONG PORT SUBCONTRACT,
PLUS
METAL FABRICATION PROFITABLE VENTURE
EXISTING BUSINESS - CONTROL EQUIPMENT DISTRIBUTION
DANCO trades and distributes process control equipment and measurement instruments for glove, palm oil, oleochemical, construction, and various engineering industries.
LATEST UPDATE: SERVING GLOVE COMPANIES, INCLUDING HARTA & TOPGLOV
RM36.5 million SUBCONTRACT AT SINGAPORE JURONG PORT
On Sep 7, DANCO bagged a sub-contract worth S$12.01 million (RM36.5 million) at Jurong Port in Singapore. According to DANCO management, the subcontract:
NEW & PROFITABLE BUSINESS - METAL FABRICATION
On Aug 3, DANCO acquired 70% of MTL Engineering and started its profitable venture into metal fabrication (What UWC and NOTION is involved in), metal stamping, tool and die making.
According to DANCO management, MTL Engineering:
RESILIENT BUSINESS, UNAFFECTED BY MCO
Interestingly, DANCO’s revenue and earnings are not impacted by MCO. Their existing business, trading and distribution of process control equipment are required by their clients all the time, regardless of economic cycle.
“We can still hope to grow even in the current slowdown because we are involved in many industries, not just a few,” Tang tells StarBizWeek.
NET-CASH RM40 million, READY TO SEIZE OPPORTUNITIES
With RM40mil in net cash, chief financial officer Tang Yuen Kin says the company, which trades and distributes process control equipment and measurement instruments for various industries will evaluate opportunities that it feels can add value to the company.
DECENT FUNDAMENTALS
BUSINESS RISKS
DANCO’s process control equipment trading and distribution business could be impacted by unforeseen black swan events. DANCO’s metal fabrication business could underperform. DANCO’s Jurong Port subcontract may not be completed as targeted.
VALUATION
Based on our guesstimates and calculation, DANCO stands a chance to achieve around RM20 million earnings in the next 4 four quarters.
Earnings Contributed by:
An annual earnings of RM20 million would give DANCO an EPS of 6.58sen.
At current share price of RM0.615, DANCO is being traded at a forward 1-year PER of only 9.35x.
DANCO, who is partly involved in the metal fabrication business, is being traded at a PER of 14 times.
On the other hand, NOTION and UWC, who are largely/wholly involved in metal fabrication business, is being traded at PERs of 47 and 63 times, respectively.
How would Mr. Market value DANCO?
Let’s let Mr. Market decide.
TECHNICAL OBSERVATION: 2x BREAKOUT COMBO, THEN RETRACED & CLOSED 12% ABOVE OPEN PRICE.
On October 12, DANCO had a technical breakout from its RM0.55 resistance. Then, it surged and had another breakout from its RM0.635 resistance.
Since then, DANCO has stood above 62 sen. As of October, DANCO is standing at 63 sen.
Going forward, how would DANCO’s share price move?
Let's let Mr. Market decide.
DISCLAIMER
Our study notes are for sharing purpose only. We could be inaccurate. There is no buy/sell recommendation.
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Chart | Stock Name | Last | Change | Volume |
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Created by jomnterry | Nov 11, 2021
Created by jomnterry | Apr 13, 2021