Business

Brokers' take

Compiled by Cai Haoxiang

TECH MANUFACTURING SERVICES | OVERWEIGHT

CIMB Research, Jan 9

In 2017, the seven small-cap tech manufacturing stocks under our coverage delivered an average return of 162 per cent.

In this note, we highlight five non-rated with 2017 share price performance below the average return of the stocks under our coverage.

Avi-Tech Electronics offers burn-in and engineering services for customers in the semiconductor, electronics and life-science industries.

Its production/testing facilities are based in Singapore and its in-house burn-in test design capability helps reduce its capital expenditure needs.

Autonomous driving and the Internet of Things are seen as potential growth drivers by management.

Avi-Tech had a net cash balance sheet at end-September 2017. Dividend payout policy is 30 per cent.

Avi-tech trades at a forward price to earnings ratio of 11.9 times versus regional peers' average of 16.5 times.

Broadway Industrial Group is currently a key manufacturer of actuator arms and related assembled parts for hard disk drives.

In 2016, Broadway disposed two of its three main businesses, namely, its foam plastics solutions and flow control devices businesses.

In its 2016 annual report, Broadway highlighted that it will continue to explore new opportunities to further unlock shareholder value.

Fu Yu Corporation is an established plastic injection moulding company. Key industries served by Fu Yu include printing and imaging, networking and communications, consumer, medical, automotive and power tools.

The company has a net cash balance sheet at end-Sep 2017 and dividend payout policy of at least 50 per cent of net profit.

InnoTek Holdings is a precision metal components manufacturer serving the consumer electronics, office automation and automotive industries.

Its stamped components are used in printers and copiers, TVs and cars. Its end-customers include Sony, Canon, Ricoh, Continental, Imasen, Kiekert, Kyocera, Konka, Innolux and Wistron.

Restructuring efforts over the past few years and a change in management has led to return to positive net profit since Q2 2016.

Manufacturing Integration Technology is a capital goods supplier, primarily serving the semiconductor industry.

Management believes that the company will benefit from the strong outlook for the global semiconductor industry.

The company has been announcing new order wins in the past 12 months.

It had a net cash balance sheet at end-June 2017 and has adopted a 25 per cent dividend payout policy.

Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.