NTE - Nam Tai Electronics
NTE - Nam Tai Electronics manufactures and designs electronic components to original equipment manufacturer. Products include LCD panels, LCD modules, radio frequency modules, circuit subassemblies, and image sensor modules.
Though the company specializes in one of the technology areas, its products already fall into commodities. However, the company keeps its operating margin stable at around 8% over the last 4 years, one of the highest among the industry (comparsion made within the peer group - CLS, FLEX, SLR). 3 out of last 5 years, NTE enjoys double digital revenue growth, in the meantime, it also continues to improve the profitbility, with current ROA and ROE at 17% and 25%, highest since 1998.
At the current price 21.35/share, NTE is valued at $926 Million. It has over $200 million in cash, with only around $10 million debt. On top of that, at the end of 2005, the board approves a total of $1.32 dividends for year 2006 - a yield over 6% now!
On the flip side, profit margin in this industry is declining, and its growth rate slows down since 2005 - which, in my opinion, is overpriced in over the last 12 months, as the stock price falls from $28 to $21, a drop over 25%.
In summary, the company has a perfect financial picture, a proven growth record, and demonstrated its cost efficiency. At the current price, I think the stock has very limited room to go down further.
Before considering it a value buy, one concern remains that insiders hold over 20% of the shares, and NTE's chairman Mr. Koo stepped in the market several times, essentially sold high and bought low, made the stock price more speculative than it should be.
I currently own NTE shares.
Though the company specializes in one of the technology areas, its products already fall into commodities. However, the company keeps its operating margin stable at around 8% over the last 4 years, one of the highest among the industry (comparsion made within the peer group - CLS, FLEX, SLR). 3 out of last 5 years, NTE enjoys double digital revenue growth, in the meantime, it also continues to improve the profitbility, with current ROA and ROE at 17% and 25%, highest since 1998.
At the current price 21.35/share, NTE is valued at $926 Million. It has over $200 million in cash, with only around $10 million debt. On top of that, at the end of 2005, the board approves a total of $1.32 dividends for year 2006 - a yield over 6% now!
On the flip side, profit margin in this industry is declining, and its growth rate slows down since 2005 - which, in my opinion, is overpriced in over the last 12 months, as the stock price falls from $28 to $21, a drop over 25%.
In summary, the company has a perfect financial picture, a proven growth record, and demonstrated its cost efficiency. At the current price, I think the stock has very limited room to go down further.
Before considering it a value buy, one concern remains that insiders hold over 20% of the shares, and NTE's chairman Mr. Koo stepped in the market several times, essentially sold high and bought low, made the stock price more speculative than it should be.
I currently own NTE shares.
posted by Siyu LI at
9:37 PM
1 Comments:
I agree with your observation in general with slight reservation. The company doesn't have strong Investment Relationship personnel, and had a bad reputation of buying low and selling high - make it a channel stock in the last 2 years.
By
Siyu LI, at March 26, 2006 12:00 AM
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