All the best guys. I'm actually secretly hoping for a bad quarter so that price can drop and can collect more. But either way it's going to be good as the long term picture is intact.
Damn! I don't know - should I be sad, disappointed, worried, happy?
The worrying thing is that the profit margin is the LOWEST in the past 12 quarters.
The revenue not so bad. The issues are: Lower ASPs, higher input costs, FX losses. The first two lead to lower margins.
I can't find the article, but I think I link it before above, that the automation kicks in 3 years from 2015 - so no automation yet. But I thought the higher exchange rate was better for these guys...maybe I was wrong.
Perhaps now the time horizon has to be stretched out further. Since net margins are being hit, it has to be compensated by higher revenue going forward. When automation kicks in, it should smoothen things out.
Also, the reporting period is Dec-Feb. If I am not mistaken December the rubber glove output was subdued, and it only kicked into gear in mid-January. Feb also is 2 days shorter than average. I'm just trying to rationalize here - perhaps the weaker December dragged down revenues, and this will be higher from March - May period (you can see the rubber glove makers all getting TP/earning upgrades these past one month).
Anyway, I will top up only if the price of the stock drops to RM0.40. Otherwise I hold horses for now as it is unclear if this is a blip or is ES Ceramics has hit a wall with regards to their revenue generation simply due to themselves hitting the maximum point of market saturation.
I mean the profit has been almost halved. It's worse than I expected in the worst case scenario. I didn't give myself enough room in terms of a margin of safety. Still, I think 12X was quite a fair value (not overvalued), so now it may get discounted and go down to 11X - i.e. RM0.38. If it holds at 12X it would go down to RM0.42. Or who knows, the market might recognize this as a blip and trade at a temporary premium of 13-14X.
The capital expenses was accounted for in 2015-16 if I am not mistaken. Need to look back in the financial statements.
Look at the liabilities though. Almost zero debt. Extremely high current ratio.
To me it looks like they've maxed out their potential...is this right? I don't know. Need to go back and study things again and see if I missed out on anything. If indeed this is their ceiling, then the only thing we can hope for is larger dividend payouts going forward.
Which makes me question...why hoard all that cash? In the 2015 AGM the ED said they are looking to diversify into chemical production and packaging...could that be the reason? If so, it's still taking so long it would have been better to return some back to shareholders.
The company has a beautiful balance sheet. It will be able to weather and live through and downturns in the future. But it needs topline growth or diversification ASAP.
There are a few other companies. But they are all Sdn Bhd. Some enterprising investors will "pretend" to be a customer and approach all these different companies and compare to the selling price of ES Ceramics to see the margin. But as it is I only hold a handful of ES Ceramics stock...doesn't make it worth it for me to do this detective work.
Shit, first time buy this share suddenly the net margin drop pulah, there are so many quarter got good profit, how come this time like this,suoi betul.
These are the articles on the automation and listing to main board. They will move to mainboard by the 4th quarter if they make at least 1 mil.
Im guessing, they were really hit by the rise in material cost. 20 mil in cash is really nothing in the grand scheme of things. You can only open a new production line with that amount. Let them keep.
I think i made an error in predicting the raw material cost, unfortunately like most malaysian companies, their operation cost structure is very opaque.
Uninterrupted profit after tax (“PAT”) of 3 - 5 full financial years (“FY”), with aggregate of at least RM20 million; and PAT of at least RM6 million for the most recent full FY.
Past 4 FYs already achieved RM 16.672 million. That means if this FY hits minimum RM 6 m PAT, it should qualify for migration.
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Posted by Jon Choivo > 2017-04-05 09:12 | Report Abuse
Ok, engine is starting earlier than expected.