With the higher production of external business product which has higher margin than the wistron product and the CNY break of a week, net profit is at 25-30mil. Forex gain is minimum on the first quarter however if USD remain at current rate, there will be a big forex gain in 2nd qtr
As shown earlier the CAGR for revenue, EPS, and dividend payout ranges from 16% to 61%. Future CAGR projection for smart speakers from analyst varies from 16%-19%. "The global blue-tooth speaker market reached a value of US$ 10.1 Billion in 2021. Looking forward, the publisher expects the market to reach US$ 30.4 Billion by 2027, exhibiting a CAGR of 19.1% during 2022-2027."
Based on the above, we will be conservative and project FPI EPS CAGR to be 16%. Our minimum expected rate of return per year is 10% and future PE is assumed to be 12. Current EPS is RM0.39. We are not excluding any exceptional gain or expense from the earning. Also, we will not deduct the net cash from market capitalization. These items approximately cancel out each other.
Using projected EPS CAGR of 16%, the earning in 10 years will be RM1.72. Multiplying this with the future PE ratio, the future stock price is expected to be RM20.65. We discount this price by 10% per year and bring it back to today. The intrinsic value of FPI based on conservative valuation is RM7.96.
This gives us a very significant margin of safety today (April,’22)
Key take away from AGM 1) vertical integration is working well and continue discuss with Wistron on potential new vertical integration since Wistron is expanding in Malaysia. 2) 20 acres of land next to wistron, discussion is ongoing with customer 3) some impact on labour cost but employee headcount reduce by 200 as compare to Dec 2021 so I assume some offset 4) there is mechanism on adjusting pricing with customer for inflation cost on material
Business still growing as revenue improve. Margin is affected on high raw material and labour. In AGM they do mention they have the mechanism to adjust price in the contract but I think there is some time gap before new ASP take effective against material price increase.
There's more small shareholders in this stock. So price is more volatile. According to TA downside risk is high so it encourages TA investors to sell. Fundamental wise I guess in coming one year profit will stay stagnant because of interest rate hike and inflation which will erode the purchasing power of consumers. This will somewhat cancel off the bullish outlook of smart audio and musical instrument demand. To be Conservative, expecting annual EPS 35 sen and dividend 20 sen.
I anticipate the attraction will turn strong when the price touches RM 2.50 (dividend yield 8%). I believe Q2 result will remain strong and so it gives very strong support at RM 2.50 from now to end of August. By end of August the price movement will be again driven by Q2 result and US economic outlook. So I think reward is higher than risk at prices below RM 2.50.
At time of recession, middle class will reduce their expenditure for entertainment. But I think sound speaker is quite basic because the cheapest entertainment one can have in a modern day is to watch movie at home (especially for a family of 4 or 5) instead of going to cenema, or listening to radio instead of going to concert. For teenagers, it may be playing computer games instead of going out for vocation. None of this can be done in a decent way without a proper speaker or sound system. First they did it because they have the money but not the freedom to travel due to covid, now they are going to do it again because they don't have enough money for more expensive activities. Same thing for different reasons.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....