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Monday, June 3, 2019

[转贴] UCHITEC (7100) Stock Analysis – Part 2

Author: 12investpublic | Publish date: Sun, 2 Jun 2019, 11:29 PM

UCHITEC (7100) Stock Analysis – Part 2

The moment you have all been waiting for, “the homework”, So without further a due lets get straight to their financials.

Profitability – Income Statement

First we’ve got to digest their income statements which is their revenue and profit. As far as its concerned we can see that their revenue is growing year over year which does not pose any issue or concerns. In the 5 year CAGR their revenue growth is 10.18% which is decent and a constant increase without any drops from revenue despite of the ongoing trade war between US and China. Total operating expenses versus their operating income is also in our favour as their operating expenses remains relatively the same while their operating income is increasing quite substantially which will increase their profitability dramatically.

Revenue have grown from around 137 to around 140 mil in 2018, but with slightly lesser net profit margins compared to 2017 thus having slightly lower net income in the year 2018 however if we see their trailing 12 months it is back up to where it was 2017 as they are increasing their operating income we would not be worried about this too much. Same goes with their EPS, it has just dipped on 2018 but we can expect their EPS to rise back in the year 2019.

As for their Return on Equity (ROE) for their 5 years CAGR their ROE is a staggering 21.54% This means that UCHITEC has generated on average of RM21.54 in earnings for every RM 100 in shareholders’ equity from 2014 to 2018.

Assets, Liabilities and Equity – Balance Sheet

As of this moment of writing their year 2018, UCHITEC does not have any debts, neither short term loan nor long term loan. Just based on this we can tell that this company has “ZERO” gearing ratio and that this company has cash reserves over the last 5 years which means all the cash they get goes straight to their pocket, no wonder they can give out such high dividend payout ratio. Holy shit, this company is a “cash rich” company!! As of 2018 their cash reserves is around 114 million.

Debt to equity ratio using their total liabilities to divide by the total equity is only 0.31 so meaning for every RM1 only 31 cents are in the form of debt but shareholders aren’t worried as UCHITEC does not have any interest-bearing debts.

Now lets take a look at their trade receivables and how long does it take to collect cash from their customers. We will use the term “Debtor Days” for this scenario. UCHITEC has a 5-Year Debtor Day Average of around 30.1 days which means that UCHITEC will receive cash from their customers roughly around 30.1 days to collect cash from customers after billing them. As for “Creditor Days” which is the other way around, paying their suppliers for raw materials. UCHITEC has a 5-Year Creditor Day Average of 219.9 days, which means UCHITEC has took an average of 219.9 days to pay its bills once being billed by their suppliers. Collecting cash quickly and being able to pay for raw materials at a slow timing means that they can get cash before they have to pay their suppliers, thus they are able to hold more cash on hand at any given time.

Another thing to take note about is also their “Inventories Days”, UCHITEC has a 5-Year Inventory Day Average of around 124.2 days which means UCHITEC has an average of 124.2 days to clear off their inventories upon receiving raw materials after purchasing them from their suppliers.

Cash management – Cashflow statement

Cash from operating activities as well as their net income has been increasing yearly except 2018 which we have discussed the reason earlier in part 1. As for free cashflow it is as expected positive from the 5 years mark. Having no long term and short term debt gives UCHITEC the flexibility to use their cash and with relatively slow CAPEX we wont be able to see huge growth spurts in the future but we can expect a decent YoY growth of 2 digit mark, and on top of that we can also expect a high dividend yield from this company as they continue to grow their cash.

Overall Rating on UCHITEC

Financial Statements: A+
- Excellent revenue and profit generating with good balance sheet with no debt

Profitability: A
- Rapidly increasing operating income compared with operating expenses, and increasing EPS

Prospect for future: B
- Don’t see a really significant growth spurt in the demand for household and professional appliances

Dividend: A
- Cash rich company with 70% dividend policy, so if cash increase means more dividend

Stock market crash proof: B+
- Even when market crash it wont drop as much because demand for household appliance will mostly stay the same

*Bonus: In the picture below you will see UCHITEC’s peers and their PEG ratio for their Net Income.

Part 1 Link >>

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