UOB KH analyst: Loke Chunying
• Maintain BUY but with a lower target price of S$0.45.
• 1HFY15 net profit slightly below estimates. Tai Sin Electric’s (Tai Sin) 1HFY15 revenue dropped 4.8% yoy mainly due to the disposal of subsidiary Vynco Industries. As a result, 1HFY15 net profit dropped 9% yoy to S$10.6m, forming 46% of our full-year forecast.
In 2QFY15, despite the absence of profit contribution from Vynco Industries, Tai Sin’s profit was relatively flat, due to lower allowance for doubtful debts and lower admin expenses which can be attributable to the disposal of Vynco Industries. However, this was partially offset by the absence of the gain on the disposal of assets held for sale in the last corresponding period.
• Tai Sin generated a negative free cash flow of about S$3m in 1HFY15 as a result of the acquisition of the property at 17 Tuas Ave 8 and the increase of investment in a subsidiary. However, the company’s balance sheet remained healthy at a net debt/equity of 9%.
• In 1HFY15, Tai Sin declared an interim dividend of S$0.0075 (the same as 1HFY14), representing a 30% payout.
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Excerpts from analyst's report