Hi WkChia I think it is because demand slows down. But will pickup in Q2 or Q3. Q3 last year was extraordinary. Normalised sale is 200-250 mil every quarter.
Before that I suspect FPI no longer get Sonos order but I think I guessed wrongly. This is the more likely to be true: FPI is still getting Sonos order through Wistron through it has declined compare to 2021 but the order awarded could have been stable. Wistron is supporting in electronics and software while FPI is doing other hardware and assembly work I guess. Revenue contribution from Wistron in 2023 Q1 could be the same or slighly less than 2022 Q4. Expecting 7 sen EPS in Q1 as no more forex loss (forex had been stable in 2023 Q1) is expected.
Hi WkChia, this is my understanding on 2022 Q4 revenue down: Customers found that Q3 sales slowed down and too much stock to sell. Feared of over stocking, they put less order in Q4. So this is just to prevent storing too much old model. Whereas in 2023 Q1, they should have already order new models to compete with competitors. So Q1 sales will be normalised. This year shipping cost is a lot more reasonable and stable. It will be easier to plan production and shipment so a more flat delivery traffic can be expected compares to last year and so does the revenue.
OEM is highly competitive and thin margin business model. The factory wont just keep 2600 workers to sit there drawing salary. With 2600 workers in the factory and improved automation, the productivity should be more or less the same as the total achievement in last year. Why would the boss keep the operators if there is no order?
Normally company like Sonos like to keep a few contracted manufacturers to compete with each other so the company is able to get a more competitive price. Hence, the diversion of some of the orders to, say Inventec. Therefore, can't blame Wistron giving less order to FPI. Early this year Sonos launch new product, so FPI and Wistron would have been busy too. This is a fast growing cake sliced half in 2022.
Other than that we should note that contribution of sales by Wistron was only 10% in 2022. We must not neglect the substantial revenue from musical instrument where demand on musical instrument such as guitar and piano remain strong in North Americal region, Europe and Japan. Maybe music is a must or maybe because IoT economy is growing despite high inflation and mortgage expenses.
@ Sardin - 8,000 shares only... I have total 46,000 shares in FPI, I intend to buy the dip & get my cost basis down.. long term dividend growth strategy... the rest in US market haha
Hi CWC1981, I can only think of 3 reasons: 1. the price drops to very attractive level, the return could be higher than its own business (likely) 2. to protect the company shares from being bought over by competitors or hostile takeover (likely) 3. the boss borrowed a lots of money to hold the shares and need company share buyback to support the price (I'm not able to judge)
I guess that person must be an insider because normal people who lack of info would not dare / willing to hold a sharp knife. And that was beyond holding, setting a floor for the price drop. Now the puzzle is resolved, it was FPI who did it.
I think I prefer FPI to do this and distribute the shares to us as share dividend. Let the company to do this for us as who else is smarter in investing FPI than FPI itself? :) Smart and right move Mr. Shih.
Technical chart is ugly, but fundamentals / value is getting more attractive as price falls. At 2.35, total market cap is only 604 million and this company has RM361 million in cash. Given today's buybacks at 2.32 to 2.35, I'm queueing to add at 2.32 to test the water. A long time ago, I queued to buy at 2.51 in a GTC order and was filled. The dividend yield alone beats EPF even at 2.51, so, I think good odds. Keep total investment small % of portfolio so that any one wrong mistakes doesn't hurt.
Hi NatsukoMishima, I dunno will go to 1.50 or not, but I contribute some first. If go to 1.50 I contribute some more ya. Like in a war, you need to have 3 defence lines mah.
Harison888, last time: EE part from Wistron --> Hardware body assembly at FPI This time: FPI hardware body part --> Wistron do the assembly with their EE part.
So in that case hor, FPI do not need to buy and resell some of the part, so you will see revenue contribution by Wistron going down but FPI is still selling the FPI-made components mah.
Why need to re-design the flow of material, one valid reason is that Sonos want to protect the confidentiality of its product mah... if final assembly simply go here and there done by sub-con then secrets leak mah.
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New IPO: The largest mini-market player and a leading groceries retailer in Malaysia, 99 Speed Mart Retail Holdings Bhd aims to list on the Main Market!
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Sardin
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Posted by Sardin > 2023-05-24 12:51 | Report Abuse
Economy at Kunshan is bad. But I think that subsidiary is related to I-phone. But FPI is not involved in I-phone.