 CEI Contract Manufacturing Limited (CEI SP) is a contract manufacturer providing printed circuit board and box-build assembly services. The company serves a diverse base of customers in the industrial equipment market, in sectors ranging from life sciences, medical technology, aviation, industrial, oil and gas and semiconductor.
This approach, combined with a competitive cost structure, has encouraged a high level of customer stickiness and above-industry margins. Operating from its manufacturing facilities in Singapore, Batam and Vietnam, the company’s factory utilisation currently stands at 70%, giving it ample capacity to take on new businesses without much additional overheads. |
FY15 net profit surged 109% to S$10.8m even as its revenue grew just 9%, driven by a rise in operating margin from 6.3% to 10%.
The company is focused on broadening its range of services from beyond an electronics house to a full-fledged contract manufacturing with box-build and mechanical capacities, and is open to M&A possibilities or joint-ventures with like-minded partners.
 "CEI has a cash-generative business model and historically has paid out 70- 80% of its profits as dividends"-- Analyst Goh Han Peng (photo) |
While the slowdown in the oil and gas sector has taken a toll on its forward orderbook, which is down by some S$10m compared to a year ago, its diversified customer base and growing momentum in its fledging equipment business should help to mitigate some of the shortfall.
CEI has a cash-generative business model and historically has paid out 70- 80% of its profits as dividends.
Based on last year’s payout of S$0.10/share, the stock is trading at a trailing yield of 15% and a historical P/E of 5.4x.
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