Techcomp

Is Europe a fertile ground for Techcomp to seek out targets for acquisitions? I stumbled on OcBC\'s report dated Mar 2010, which has this par which suggests that Techcomp is gonna be buying up good companies there: \"management is also looking to grow its business and expand into Europe via mergers and acquisitions (M&A) of companies with complimentary technology. It started its M&A trail with the acquisition of HCC Group (based in France since 1918) in Jul 2009 and has already managed to turn it around last year. Techcomp also recently acquired Precisa (based in Switzerland since 1935) and expects to turn the company around this year; this by shifting some of the sourcing and manufacturing to China. Management has identified M&As as a viable growth strategy and will continue to be on the lookout for targets in Europe, which it intends to fund with internal resources (has US$14.9m of cash as of 31 Dec 09).\" www.ocbcresearch.com/Article.aspx?type=r...20100316091354_59202

CIMB-GK touched on the possibility of Techcomp going for dual-listing in HK. Sounds logical, cos Techcomp is a HK company (with manufacturing ops in China). If the dual-listing is on the cards, then we should see an announcement in the next couple of weeks or months. Keep your fingers crossed.

Bonus shares were issued today and ready for listing tomorrow (ie, May 18, Tuesday), according to Techcomp announcement. >> Further to the earlier announcements, the Board of Directors of the Company wishes to announce that 77,500,000 new Shares (the “Bonus Shares”) were issued today pursuant to the Bonus Share Issue. The Bonus Shares will be listed and quoted on the Official List of the SGX-ST with effect from 9.00 a.m. on 18 May 2010.

The current 25% retracement bores well for Techcomp shares to surge to new highs after their interim results. I am expecting no less than a 20% improvement in sales and a 20-25% jump in interim profit. This Company, barring unforeseen movements in Yen, should post profit around USD 10-12m for FY2010 given its stable sales growth and margin improvement due to better manufacturing efficiency. Assuming a USD 10m profit and a 10x PE, we should see Techcomp trading closer to 60 cents by end 2010. Assuming a USD 12m profit and a 10x PE, we should see Techcomp at 71 cents. Easily a double bagger from current market price.

Techcomp is up 1.5 c now to 32.5 c. This is equivalent to 48.75 c pre-Xall. The stock price prior to X-all was around 62 cents. My, it has been a sharp drop of abt 21%. The traded volumes hv been pretty low, so my guess is that it\'s a couple of shareholders who didnt have much holding power, or much faith in the company. Oh well. If you have any interest, you can read the story of the founder-President, Richard Lo, who started Techcomp 22 years ago and has never had a loss-making year. He started as a 1-man show and HK$50,000, and now runs a S$70 m company. www.nextinsight.biz/content/view/345/79/

I see support at 27-28 cents level. Remember that Techcomp is looking to buy companies in Europe. This current crisis presents the best buying opportunity for Techcomp. Genuis or stroke of luck by the management.