For a good business, how high is high le? For a bad business, how low is low le?
Risk is just a matter if you know what you are doing. If my information is correct, then, DUFU will report good earnings in Q2/Q3. But maybe not Q1. By that time, Uncle John is gonna say "got support at RM1.80, high risk". But Uncle John will forget that he once said that when DUFU is having a support RM1.17.
normally Q4 are the best QR. Espected YOY will lower but QOQ increase. After QR ROE ard 20 and p/e 7.7%(EPS Y17=16, Q4=4.3). P/E below 8 but ROE 20 consider very cheap price.
before Q1'17 results announce, everyone predict it will go beyong RM2, then it dropped from RM1.65 to RM1.27 eventhough with better YOY result published... so on what basis you say TP2.88 ?
Basis of Valuation For Q3 Dufu reported a net profit of RM 6.4 mil with an EPS of 3.8 Sen and for the year to date to 30 Sept a net profit of RM 19.6 mil with an EPS of 11.7 Sen. The net profit would have been higher if not for the Forex loss of RM577K in Q3 and total of RM2 mil for YTD.
Given the positive strong statement by Dufu’s Board on its prospects for remaining qtr (see below extract), I have estimate Q4 EPS to be 3.8 Sen (same as Q3. Note that the average EPS for last 3 qtrs is 3.93 Sen) to give me an estimated FY 17 EPS to be 15.5 Sen.
Dufu’s Board Statement on Prospects in Q3 announcement
We expect sales to continue to remain favorable towards end of 2017 as our major product is driven by the growth in high-capacity nearline HDDs as well as stabilization of client storage demand. The long-term future of HDDs are likely rests with high capacity HDDs, particularly in data centers serving cloud storage applications. The demand for high capacity storage drives, enhanced performance, and lower storage cost is set to rise. Global internet penetration, the rise in e-commerce in emerging markets, and the current trend for high-resolution media standards are the likely drivers for the continuing rise in global data storage demand. Nevertheless, the Group will continue to improve its operational efficiency and keep a tight rein on costs to ensure price competitiveness on its products. The Group is also working closely with existing and new customers in creating value to their supply chain, and will continue to seek opportunity to venture into new business segments that can synergizes with the Group’s current business model. With this in place and considering the continuing stable demand based on the current market trend and assuming that there is no volatility in the United States Dollar (“USD”) currency against Ringgit, the Group is optimistic about its earnings and growth in the coming quarters
9 mths YTD to 30 Sept 2017 vs 9 mths YTD 2016 (See attached Excel Table below)
1. Sales increase by RM8.3 mil or 6.8%
2. Gross profit margin increase by 7.1% from 25.3% to 32.4% (an increase of 28.1%)
The increase in GP margin is due to management restructuring its operation for improvement in its efficiencies and cost control measure implemented.
3. PBT had increased by RM10.2 mil from RM 15.5 mil to RM25.7 an increase of 66%
In 2016, there were two expenses not relating to operation, which I adjust to add back to my adjusted PBT so we are comparing apple to apple.
There was a Criminal Breach of trust expense of RM 2.7 mil (this was subsequently recovered in Q4 2016) and a NON TRADE LOAN impairment of RM1.2 mil. Total adjustment is RM3.9 mil
4. When comparing with 2016 ADJUSTED PBT, PBT had increased by RM6.298 mil from RM 19.378 mil to RM25.7 an increase of 32.5 % (highlight in Yellow in Excel Worksheet)
5. Net profit had increased by RM 7.7 mil from RM11.9 mil to RM19.6 mil.
6. The EPS for 9 mths YTD 2017 is 11.7 Sen compared to 2016 EPS of 6.95 Sen
7. For 9mth ended 30 Sept, the Co has net cash generated from operation of RM46.3 mil (2016 RM 25.8 mil ) For FY 2016 the cash generated from operation was RM46.5 mil (FY 2015 RM25.8 mil) Thus it has strong cash flow generated from operation,
8. At 30 Sept 2017, its net cash is RM30.745 mil (equivalent of 18.5 Sen per share)
9. Dufu has strong Balance Sheet with zero net gearing.
You may be concern of the strengthening of Ringgit which could affect Dufu profit margin.
Most tech companies in manufacturing also have very high import cost components, so the forex issue is there, but should be manageable. Still, for tech companies, they had been doing very well the past several years not bcos of forex gains, but bcos of increased sales from global tech sector upcycle... and this up cycle is still strong.
So, for Dufu, Forex should still be manageable... If you recall Q1 16, RM appreciate from 4.30 on 2 Jan 16 to 3.89 to mid-April 16 and at 30 Sept was 4.125 and Dufu was profitable for the 9 mths in 2016. If you take Q3 16, the RM to USD range from 4.00 to 4.125 and in Q3 16, and Dufu made a net profit of RM7.36 mil in the quarter. Hope this allay your concern
It is having resistance at 127. Dufu was Ooi Teik Bee counter previously. When it price dropped below 200 MA, OTB divest Dufu and his followers who panic follow suit and their volume could have be disgested in the market by now. I think OTB would regret when it moves
The price went down after Q3 announcement as operators flush it down to 102 to collect it.
As Dufu is in a mature HDD industry where the CO command about 40% of market share (source from CO, its growth is in region of 8% in line with Seagate and WD annual growth. 70% of its income came from 3 customers (very likely all from HDD). I would not Duf a PE greater than 15 inview of the its current mature business with organic growth. I would be conservative to give it a PE 10 to PE 12 with a valuation range RM1.55 to RM1.86
Any valuation by Mr Market of more than 12 is a bonus..
Dividend Paid for FY 2015 3.1 Sen , FY 2016 4.5 Sen and FY 2017 interim Dividend 2 Sen paid on 12 October.
Investors overlooked it Dividend Policy (Paying at least 50% of PAT) per Annual Report FY2016
Dividend
For FY2016, the Board is pleased to recommend a final single-tier dividend of 3.5 sen per share for the approval of our shareholders at the forthcoming Annual General Meeting (“AGM”). If approved, coupled with the first interim single-tier dividend of 1 sen per share paid out on 10 October 2016, the total dividend for this financial year will be 4.5 sen per share which is higher than the total dividend of 3.1 sen per share paid in respect of FY2015. The dividend payout for FY2016 is consistent with the Company’s Dividend Policy whereby at least 50% of the Company’s Operating Profit After Tax (PAT) will be paid as dividend to shareholders after taking into consideration of the Company’s retained profits, cash flow as well as the funding requirement of the Group.
As at 30 Sept the EPS is 11.7 Sen. We would expect payment of more than 5.5 Sen at minimum. Thus it is a Dividend yield stock. With projected net profit of 15.5 Sen, we can expect 7.5 Sen payout
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slts
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Posted by slts > 2018-01-04 10:30 | Report Abuse
Dufu is the cheapest tech stock.
just buy & wait.