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zzxbzz's avatar

Nice Find.

While this stock has no near term catalyst, its gross profit margins have been increasing at each half year reporting (37.5% for 1H FY 2024)

In its recent half year reporting it has been able to record higher gross margins on the back of a higher revenue as well.

Adding to that

Nan Pao has shown growth of around 12% from (Apr 24 - Sept 24 vs Apr 23 - Sept 23)

Greco has shown growth of around 17% as well

Yue Yuen's Manufacturing business went from -0.10% YTD Change in March 2024 to 9% YTD Change in September 2024

The above might indicate that the fall in revenue is likely to stop this upcoming half year and might even show revenue gain(Though i feel that overall revenue compared to Last FY should be within the range of -10 to +10% due to 1H Revenue being lower YOY)

If the company is able to execute similar 1H Margins or better, it would likely result in a higher net profit. With the company being a keen dividends payer, this would translate to better yield

The interesting mid-term will be whether margins can improve further with the new factory. 74 million already put in and the ppe+rights use of asset as of March 2024 is only 121 million. As such, it definitely is quite a huge capex / project.

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Stefan Block's avatar

Dont like that they dont comment on declining revenue, since last year no word on why. Also what they plan with the new plant in Indonesia without demand is not clear. Their communication is poor, I guess that may be one reason why they look undervalued.

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