INNOTEK

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14 years 3 months ago - 14 years 3 months ago #3385 by neontet
Replied by neontet on topic Re:INNOTEK
The CEO used to be a CFO, so he should know the numbers when he stuck out his neck & told the whole world he will maintain 5 cent dividend a year. He knows InnoTek has strong cashflow, and it has strong net reserves. Given the cashflow and reserves, a M&A may not derail the plan to sustain a high div policy. And of course, the 5-c dividend policy is not just one guy\'s wish - it should have had the Board of Directors\' backing/agreement. Think of it another way: By sticking his neck out publicly on the 5-c dividend policy, he risks losing all his credibility if it turns out that InnoTek cannot pay 5 c for FY 2010. Just consider FY2010 first - cos anything beyond that is too far into the future. So while some forumers choose to be sceptical, I continue to view InnoTek as a 10% yield stock (since the stock price is 50 cents with a 5-c payout - yield is higher if you had bought it at 40 cents recently), with meaningful capital gain potential of perhaps another 20%. :) :)
Last edit: 14 years 3 months ago by neontet.

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14 years 3 months ago #3388 by neontet
Replied by neontet on topic Re:INNOTEK
Arent you all curious as to what the CEO has in mind with the share buyback scheme? How much firing power is he devoting to this? Yesterday, Innotek bought back its shares again. It\'s been an almost daily affair, the latest involving 700,000 shares at 50 cents a share. To date, since the buyback mandate was achieved probably nearly a year ago, the total shares bought bk is 14.8 million, which is 6.35% of the share capital. Are these bought-back shares entitled to the 5-cent dividend that is coming up? I believe so, as they have not been cancelled but are kept as treasury shares. Any expert out there who can comment? If they are entitled to the 5-c div, then it makes sense... Instead of keeping the cash in FD earning 0.5% or whatever, hey, the cash can be used to get a 10% return.

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14 years 3 months ago #3391 by zhuangzi
Replied by zhuangzi on topic Re:INNOTEK
Treasury shares are not entitled to cash dividend.

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14 years 3 months ago #3392 by musicwhiz
Replied by musicwhiz on topic Re:INNOTEK
I noted that Innotek has been buying back shares, but the effect of such buy-backs as the price keeps rising means that more and more cash will need to be expended to buy less and less shares. The trading volume is very high now that the CEO and ex-CFO has stuck his neck out to say he can maintain the 5c per share dividend. For myself, I\'d rather adopt a wait and see attitude, especially when there is currently so much hype and \"buzz\" surrounding Innotek. It\'s never a good idea to buy when the crowd is also buying at the same time. No harm taking a step back and observe first. Just my 2-cents.

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14 years 3 months ago - 14 years 3 months ago #3412 by jinraidx
Replied by jinraidx on topic Re:INNOTEK
I agree with Macguyver on this one. This are the points for the counter - M&A past performance has been poor. There have been regular write offs and impairment of investments - this includes daylight and mayex operations worth ard $2m now only vs approx $4.6m cost - Disposal of MPT in 07 hence cash pile of $142m ($72m profit) - firm is capex intensive with $18-21m p.a depreciation vs $360m of revenue and $9.4m of profits in 2009 with 50% worth of equity in PPE - EPS ave 3 cents p.a vs dividend of 5 cents? - cash pile will last for [$109 - 43(debt)]/($0.05 * 243 shs) = cash pile will give approx 5+ years worth of dividends. (slight more since treasury shares abt 10% of capital does not need dividends). - This is assuming firm wont make losses which is not reasonable since 2008 was a big loss even though it was partially due to FX losses. - mgmt did mention results will improve but not near the 2007 results. Even then, it was not fantastic results with NPAT of $21 on top of 448m in revenue in 2007. - Firm is buying back shs for this reason (better to have >10% yield) vs. M&A or expanding businesses organically rather than the stock is undervalued. This should be a red flag. - Innotek does not have strong cash flows! 06 and 09 had negative free cashflows as capex for this firm is large. - I do not think it will tank, but certainly XD, price will dip a little. However this firm seems to be a candidate for fading away after 2-3 years. Also agree with musicwhiz on entry..very bullish this week.
Last edit: 14 years 3 months ago by jinraidx.

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14 years 3 months ago - 14 years 3 months ago #3446 by Dongdaemun
Replied by Dongdaemun on topic Re:INNOTEK
InnoTek continued buying bk its shares. This evening\'s anouncement is of 500,000 shares bought 52.5-53.5 cents today. Total 15.845 million to date. There must be a grand scheme behind this: I give you my 2 cents worth. InnoTek is buying back all these shares which will not be entitled to a 5-c dividend payout. So if it pays 53 cents in the open market for the share, its cost will actually be 48 cents (ie 53-5 cents). Now, InnoTek has said it expects Q1 this year to be better and ditto FY10. InnoTek must be expecting the share price to do better when 1Q results are out. Maybe it will hit 60+ cents, whatever. At some point all the boughtback shares will be released back into the market via a placement. They could fetch 60-70 cents perhaps. So it\'s a form of insider buying: They know business performance will be good enough for the market to re-rate the stock to 70 ct, whatever, and so they are confident of buying low and selling high. If that\'s the game plan, then you understand why InnoTek is aggressively buying bk its shares. InnoTek is going to have the last laugh (vis-a-vis its sceptics who are scrutinising its sales/earnings/expenses, etc)
Last edit: 14 years 3 months ago by Dongdaemun.

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