Can't really say much on their raw material cost. Their financial/annual reports don't really break down their cost of sales. Like for example, in the 2nd Q vs 1st Q results, there was a significant increase in Cost Of Sales.

1st Q revenue 58.2mil
Cost of sales 43.4mil

2nd Q revenue 64mil
Cost of Sales 53.8mil

Q over Q comparison, it seems nonsense right? COS increased by 10m when revenue only increased by 6m

Digging further in, if you review Cash Flow.. we can see a 7.4m Purchase of Property, plant and equipment...
Seems like the 7.4m is included into the Cost of Sales figure as well.

If need to guestimate.
I would say out of the 53m cost of sales, material cost should be about 40-50% of it? YOY metals dropped abt 20%.. so assuming notion can benefit from this, that translate to about 4 million gain per Q.
20% of 20million raw material costs.

But as I was from manufacturing previously, some vendors have a very tight control on their supplier's margin, even going into knowing exactly how much each BOM costs, and they will negotiate and give x% of profit to their suppliers... if this is the case, material movement cost wont effect Notion. Which I don't think is the case, since I remember reading Notion used to hedge on aluminium as well..

Yupe, reason why I'm still holding, we can do a quick projection of their next Q's EPS. If you exclude last Q's forex losses, assuming their revenue and margin is similar, they can be profitable back very fast.

bsngpg - I think we need to be objective in analyzing a business.
1) flood is not in their control, and it did brought in a lot of HDD revenue at that time, so flood was beneficial to notion.
2) Forex loss. Overall, they did gain initially on forex hedge, but from my last estimate, I think they broke even, or didn't lose/gain too much either direction? as i typed b4 reading ur post, oil price drop, and 1mdb really killed RM. And AirAsia/AAX has a big forex position too. Decision to hedge is fine, but I disagree on the AMOUNT of hedge they took.. it's really insane amount.
3) camera, again can't blame that too much. We need to assess objectively, they moved from HDD > CAMERA business and it was a good decision for a few years. And we can see they're entering Automotive now. They are responding to market trend, although they maybe a bit slower than usual. I think partly it's because they want to maintain their higher profit margin. Therefore they can't gain new customers as easy as other business I think. Even now, Notion's operating margin is pretty good at 15%+ IIRC... compare that to JCY's 7% margin for instance. If notion throw price, I think they could easier get new customer. But that may not be what we want as well..
4) Yes, agree on Silver, it's a bad call because silver n USD is hedged in same direction as I posted in detail just now.
5) Phone business... well, initially I would say it's 100% failure, but I'm a bit more optimistic now. LOL, as mentioned I rate it as 75% failure rate... I think their strategy at least in marketing the HP is good, and the cost price of the phone is low. So overall at worst, we can expect a one off writeoff of 250k. As long as they don't incur additional OPEX by hiring big sales team etc... then it should be fine.

Granted, we are no multi million business chairman/BOD... so, I can only hope they are able to execute on their business.

Forex hedge is fine if they hedge for 1 year of their revenue in USD, but the amount is insane, their hedge is like 500 million at its peak, iirc? it's like gambling d. Aih.
We want the co to be profitable from their business, not for them to speculate on the forex... But overall, across the years, I think their forex gain cancelled out their losses...
Also, if not for the oil price crash, they may actually escape and the forex won't lost so much.

Come to speak of silver, actually silver and USD hedge is the same direction..... as we know, gold/silver gains when USD drops. Since they already hedged on USD weakening, buying the silver business is a further 'bet' on USD weakness. That's why they got wiped out when USD strengthen.

Where was the internal risk control?
1) Risk of preventing a massive hedge position from being taken, literally forming a 4th pillar of 'notion business' - forex betting.
2) Risk of hedging/betting everything in the same direction. To me, silver price and usd weakness moves in tandem. The forex already hedge on USD weakness. Buying silver, is again a similar hedge on USD weakness. Silver falls, when USD gains..

So there is this concern on their business.
Granted the oil price drop literally caught everyone by surprise, and 1mdb doesn't help the forex too... Anyway, I think the worst is over, unless they go and buy 10 million worth of HPs and can't sell. LOL.

CAPEX to setup their phone business, should be around 250k I believe. FB site, website and an initial 1k phone order. Just selling it online, they may just hire an additional staff to check the FB etc, but most likely, I think they will reuse existing staff to monitor the FB/update.

OPEX for phone business must be below 2k for the phone business to be viable. Otherwise all phone sales profit will just be sufficient to cover the OPEX.

For their phone business to be profitable.
1) Opex must be <1k (meaning no new staff hired just for the phone business)
2) Sales... Mmm 100 phones a month.

I will still rate their phone business as tough, and again will still brand that as an eventual failure. Even if it's successful, profit contribution should be marginal after deducting OPEX.

Technical/Chart speak: Seems like accumulation is happening, 38-40 range. 40 cent volume is good for the past week. Maybe accumulation happening prior to quarter result announcement around 18th August.

Yeah, I did found out about the trendi site... at 1st I think the phone business is doomed to fail. LOL!
After monitoring their strategy, and also they're selling it regionally.....
I upgrade their phone business from 100% fail, to 75% fail ba.

Yeah, I'm still averaging down here n then when possible :P

I still think they have a good core business, it's just that their 'new businesses, AHEM Silver Mine' that concerns me...

Their core CNC business, actually should still have a lot of room to grow/expand. There's a lot of products that those CNC machines can be used to make.
Aerospace should be a priority that they should enter, we heard TCF mention about this couple years back then, but wonder what happened to it :(

Weird... someone actually paid RM1.44 to convert Notion WarrantA to share??? WTF?
Small amount la, just 200 units... but still... really weird. lol.
Same with WarrantB too.... really really weird. Someone too rich to convert rather than to buy from open market?

Types of corporate proposal Exercise of Warrants
Details of corporate proposal Conversion of Warrants-A to Ordinary Shares
No. of shares issued under this corporate proposal 200
Issue price per share ($$) Malaysian Ringgit (MYR) 1.4400
Par Value ($$) Malaysian Ringgit (MYR) 0.500


Involve issuance of new type/class of securities ? No
Types of corporate proposal Exercise of Warrants
Details of corporate proposal Conversion of Warrants-B to Ordinary Shares
No. of shares issued under this corporate proposal 126
Issue price per share ($$) Malaysian Ringgit (MYR) 1.0000
Par Value ($$) Malaysian Ringgit (MYR) 0.500

New subsi, IL Solar, seems like they're going big into this sector.

No share buyback announcement woh, 3rd party attacking....

But, on a serious note, it's been very steady going up slow, and bit by bit.
Whoever buying (ILB sharebuy back) and also other ppl accumulating, have good holding power.

everyone continue to buy, then mai come lo :D

IL Energy? mmmmm new business taking shape?

excel, can i ask why you can confidently give a magical number, rm 1.72? :)

3rd Q projection. Revenue 70m, operating income @ 16% of revenue 11m. expect small forex gains from < Rm 3.7 for April and May. Net forex gain 2m. - finance cost 1m + 1m taxation credit

13m profit/270418065 = 4.8cent EPS, - 20% for variance/inaccuracy still have 3.8 cent. Assume a further discount of 30%, also EPS of 2.7 cent is achievable..

Hope I'm not completely wrong ba....

Also, I think we can see Notion will probably get EPS of 3-4 cent per Q post the expiry of the forex hedges. Total FY EPS will be 12-16 cents!

Also for 2nd Q results, if you read their cash flow statement, there's a 7 million cost involved in either replacing their CNC machine or service/repairs incurred in their cost of sales.

If not for this amount, they could actually have breakeven already in 2nd Q itself. Maybe kitchen sinking, to book all costs in to 2nd Q. 3rd Q result gonna be exciting I hope!

And please... don't buy the handphones!! Surprisingly, as much as I want to findout more about their smartphone, I CANT... not in facebook, not in google. If they're actively marketing it, they're doing a bad job. Let's just hope it means they cancelled their whole smartphone idea completely...

Also, I think we can see Notion will probably get EPS of 3-4 cent per Q post the expiry of the forex hedges. Total FY EPS will be 12-16 cents!

Also for 2nd Q results, if you read their cash flow statement, there's a 7 million cost involved in either replacing their CNC machine or service/repairs incurred in their cost of sales.

If not for this amount, they could actually have breakeven already in 2nd Q itself. Maybe kitchen sinking, to book all costs in to 2nd Q. 3rd Q result gonna be exciting I hope!

And please... don't buy the handphones!! Surprisingly, as much as I want to findout more about their smartphone, I CANT... not in facebook, not in google. If they're actively marketing it, they're doing a bad job. Let's just hope it means they cancelled their whole smartphone idea completely...

Im an existing shareholder, assessing my portfolio every now and then. I sold some profitable shares to average down a bit more today at 37. Give notion 1,2 good quarters, and I'm sure it'll go back up around 50-60 cents. What price did you bought bsngpg?

US automobile sales result out later today, expecting a very good month for May as well, with 17 million cars sold. TRW shld be a strong player in the US market.. wonder how much business it can give notion only. Let's hope Notion can grow their revenue with TRW, as TRW is a very very big player.

USD to RM for April and May is below M2M price of 3.70, so there's some forex gain for sure... At the moment, June seems like 3.70++ maybe some M2M gonna happen for 3rd Q, but depending on outstanding position left, any additional forex losses if USD > 3.80 per RM, can be partially offset by higher profit from sales as well.

Another precision machining company, Luster Industries.

NAPS 9 cent.
Revenue 1st Q 30 mill
Operating Loss = 1.9mil, margin = -1.9/30 = -6%? uh... not sure how to calculate negative margin :P

Feel free to add other machining companies result you know off... chau for now.

EDIT** ASTI one inaccurate, not apple to apple entirely, as they have other business divisions.. semicon etc.

Found another one, ASTI group, listed in Sg, parent Co for Emerald Precision Engineering. Doing same CNC machining/precision parts.

Let's look at their figures, based on FY2014.. No 2015 Q reports available.
I wont do SG to RM translation to apple apple it.. but you can take the % figures..

ASTI Group share price (SGD) 0.06
NAPS = 13 cent.
NAPS/Share price = 2.1x, notion NAPS/Shareprice = 2.8x

Revenue, FY 2014, SGD 135160k
Operating profit = 2616k
Operating margin = 2616k/135160k = 1.9% about the same as dufu also. Notion's 14-17% op margin is really strong now, if you compare with other player in this business.

ASTI
EPS = 0.44 cents
PE ratio = 6/0.44 = 13.63. I'm projecting Notion 3rd and 4th Q to have EPS of 3.7 each. Total notion FY 2015 EPS, 3.7cent
PER = 37/3.7 = 10.

Is there another CNC business with a better fundamentals? I want to see how bad/far notion is, compared with a true precision manufacturing best of class leader... Maybe i widen my search to US/China market..

Something i posted on DuFu thread. Dufu is another company doing CNC machine, exact same business profile as notion, but their product only HDD


Net Asset Per Share.
Notion 105 cent, Dufu 57 cent (84% more NAPS)

Revenue
I'll take average 1 Q's revenue since Dufu only 1st Q result.
Notion ~66million, Dufu ~34million

Operating margin
Operating income/revenue
Notion ~ average of 2 Qs 17341k/122193k = 14% margin. Dufu = 733k/34958k = 2% (dufu need to do 7x sales, to get equal profit with notion) 700% more margin vs DuFu. This latest Q result can say bad margin d, normal notion margin is 17%!

EPS.
Dufu = 0.31 sen. Notion = -1.69 sen [Expecting notion EPS for 3rdQ to be around 3.7 sen per share, to totally breakeven 1st 2 Q's losses] Assume same EPS for 4th Q if not higher, FY EPS for notion despite 2 first Q loss = 3.7 sen per share.
Assume Dufu 10% increase in EPS QoQ, 0.31+0.34+0.38+0.42 = 1.45 sen.

And dufu share is at same price range.. abt 36cents now.

So... I just find it interesting, that two business exactly same CNC business, almost same share price 36 for dufu vs 37 for notion.

But if you look at fundamentals, notion's fundamental is much much higher than Dufu's. Do you know of another company doing CNC machine business listed in KLSE too? Good to do comparison of same industry companies.

Hi guys, actually, I wanna ask a question, why you buy DUFU, vs NOTION for example?
Disclaimer ** I'm invested in Notion la...

Just wanna discuss a bit, and share share ya, since notion and dufu do exactly same business, (CNC machine) so we can compare apple to apple.

I'm comparing both latest Q results.


Net Asset Per Share.
Notion 105 cent, Dufu 57 cent

Revenue
I'll take average 1 Q's revenue since Dufu only 1st Q result.
Notion ~66million, Dufu ~34million

Operating margin
Operating income/revenue
Notion ~ average of 2 Qs 17341k/122193k = 14% margin. Dufu = 733k/34958k = 2% (dufu need to do 7x sales, to get equal profit margin with notion)

EPS.
Dufu = 0.31 sen. Notion = -1.69 sen [Expecting notion EPS for 3rdQ to be around 3.7 sen per share, to totally breakeven 1st 2 Q's losses] Assume same EPS for 4th Q if not higher, FY EPS for notion despite 2 first Q loss = 3.7 sen per share.
Assume Dufu 10% increase in EPS QoQ, 0.31+0.34+0.38+0.42 = 1.45 sen.


Of course, currently overall notion's profitability is not good because of forex hedging issues. But that's expected to be over already, with a bit left of outstanding hedge left.

So... just curious, why Dufu, especially if price of both is roughly the same now?
I'm just talking fundamentals, and numbers that we can roughly estimate. Don't shoot me! :)

Still wait? Some good news on SLR Lens sales, have bottomed out, and volume for April 15 is 98% of last year's.

http://www.cipa.jp/stats/documents/e/dw-201504_e.pdf

Heavy buy back going on...
Cons : their dubai business is taking much longer to turn to black :(
Besides the cash asset, only other news that is fundamentally positive is their expansion in China warehouses, which will only take effect early 2016.

Long wait for it to rocket

Overall, market reaction seems ok today, I'd expected worst to be honest.

why would the phone project encounter delays? Do you have more information?
From what we can guess.

On the phone itself, the telephone should be the easiest part of their business.
1) It can be as simple as just a rebadge of an OEM phone - This project should be risk free at least on the phone manufacturing process, and would not incur what you're saying.
2) It can be more complex, if they want to hire UI designer to skin their phone as well. But even then, this is cosmetics and doesn't really have risks to it.
3) The manufacturing of phones by OEM factories in China is very well matured too, shouldn't have issues, unless they got conned by scammers.

On the supporting side
1) Facebook/Website marketing - Need to create FB account, and/or website to perform the sales of the phone
2) Staff hiring - Hire staff to manage the sales, marketing, packing/shipment of phone


Personally I'm hoping from their silence on this (no mention of phone project in their Q report at all), means that they're dropping the phone business idea completely. Especially if their core business is getting back on track, which is getting back on track.

It's gonna FLY~~~~~~~~~~~~~~

Blackout, 2nd q end of march, forex at 3.70 that's why marked, April 3.6 and may 3.6 also la let's say. So will get some forex gain from d higher MTM at 3.7 in march

As a stuck in d boat investor. I like good growth in their HDD n Auto business. I think they managed to utilized d machines vacated by loss of camera business d. No point to cut loss n give other ppl profit ;) I don't have the figures now, will post again later, but iirc, their auto business growth is impressive actually. QoQ is almost 30% growth in this Q alone. If not for weaker euro for their auto business, QoQ growth is more like 35%?? Need to refer back my excel in a while

Ya, mistakes in estimating d forex losses to b at 7million. :( fundamentally its good though. I think their CNC machine use rate is much higher now? 1st time since a long while revenue hit 63m per q. LSO forex close at 3.70 in march. In April forex close at 3.60, so confirm some forex gain realized back. and may now at 3.57. Ideally get some forex gain back, before USD strengthen back to 3.7 ba.

But assuming revenue is fattened by forex exchange by 15, deducting 15% revenue is at 53million. Don't have access to previous q results now, have to see past results what is their machine utilization is at 53-55 mill sales

Guest i should explain more... forex losses can be 'calculated' from the outstanding balance of their hedges, and the margin of increase by USD to RM since last Q's closing.
Similarly, the stronger USD can also be calculated to increase revenue by X% since last Q, assuming everything remains the same.

If revenue is the same, expect loss of -1 mill to breakeven I guess.
If revenue increase QoQ we may see profit between 0-1 million.

This is just an educated guess, buy/hold at your own risk :)

if still holding, don't sell, much better results expected for 2nd Q report in few weeks, should breakeven or minimal loss/gain +/-1 million ba. Accumulation going on

I'm still holding!! And it has turned green ;) Averaged down 93.5, 93, 90.5, 90, 89, 77, 81.5, 72.5, 67.5, 69.5.

important for it to close at 43/43.5~!

6 million volume today, only 1 day in the past 3 years have more volume, at 7 million on 20/5/2013

But I think it'll easy come easy go... Profit taking happening already

5 million volume up until now... interesting...

Nothing new there, old news

78 cents now, where's the other guys who are here? hope you all didn't cut lossed.

Need to re read it again

Loss seems to be from disposal. Although the Q report is a bit hard to read... There is a 40million impairment loss in associate from their current asset. However their net cash increased... Also. They mentioned interim dividend, n not final dividend. Could b another dividend coming during AR announcement?

Forex rate from 30/09 RM3.28 (Outstanding hedging contracts, RM369,976,000)
Forex rate 31st December RM3.49/USD (Outstanding hedging contracts, RM216,469,000)
Forex increase of 21 cents, from previous close = -17million losses.

Assume all things equal, guessing Notion's next Q results.

Now forex at 3.60, 11 cent increase but outstanding position reduced by 1/3.
If March 31st RM close at 3.60 = (Half the forex loss 11cent vs 21cent, * 2/3 outstanding position) = forex losses of 5.28 million, profit of 10million = net profit 4.7million

March 31st RM close at 3.70 = (Loss 21cent, * 2/3 outstanding position) = forex losses of 11.28 million. 10-11.28m = net loss of 1million

Where the forex goes, notion goes.... the most ironic part of it all is, if RM strengthen after March/June... :S

Q result is out, supposed to be profitable 10 million, but the forex lost 17 million, overall 1st Q lost 5 million.

Electricity tariff reduction will make for an interesting march-june Q report.

Oil price is projected to stay low for the next few months. Gonna be interesting to see the impact on their Q results.. but have to wait til 25+ feb I guess..

But the AL says their current forex position as of Sept 2014, so I'm also not sure.
But somewhere in the last 2 Q results, I don't know which d, even when USD keep rising, that quarter they did made forex gain from their hedging.. which means they hedge the other way already. Anyway, will we c their Q result b4 or after CNY?

Interesting... seems like they did hedge the other way now... USD gain, means they gain more, page 84. The figures on the right is for 2013

If this is true, they'll gain a lot from the forex then.. we can only confirm by end of Feb when they release their 1st Q result.

United States Dollar:
- strengthened by 5% 869 (965)
- weakened by 5% (869) 965

I'd rather senior management/directors to spend their efforts on getting their CNC utilization up. I really believe their hp business will be a wasted effort. It's really really not easy. Even if each phones costs RM100, that'll be 5million.
And once your phones don't sell within 6 months, they're obsolete, and you have to write them off. I'm speaking from personal experience, and really don't feel good about their intentions on this. Risk reward is just not there.

I'm not too fancy into their smartphone selling business. Again, they're going into a totally different segment which has its own headache. Actually, I'd rather if they cancel their intention to do that. It's NOT EASY, and I foresee a lot of headache over it. 1st of, which market segment you want to penetrate? Also, do you have the support lines for warranty, or the firmware update issues? A lot of challenges. I've personally been in a company who did rebranding/resale.. not good story.
Actually, I will email them to don't do it.. But I doubt they will listen.

On to better news. WD has just announced their Q results yesterday.
QoQ, their enterprise HDD sales increased from 7.763m to 8.041m abt 3.5% increase.
So with this info, we can safely say their HDD segment will at least maintain their sales, if not grow by 1-2%

This is done for my personal review of my holdings of notion, and I believe is well balanced, supported with numbers, and also highlighting worst and best case scenario, I'm still accumulating and plan to continue accumulate during this 4x period. Selling now, is similar to selling at bottom, and you will only make other people gain money on the upside.