by winston » Sun Aug 03, 2014 1:00 pm
vested
July 24, 2014
MFS Technology generates FCF despite weak operating profits; 30% of market cap is net cash.
United Engineers, which is listed on SGX, owns 77% of MFS.
MFS specializes in design, manufacture and assembly of a broad range of flexible printed circuit board (FPC), Flex-rigid and PCB products.
Production overcapacity remains a feature of FPC and PCB industries resulting in keen competition among industry players.
Market demand is muted due to slow recovery in the developed economies and exacerbated by rising global interest rates.
Against these negative backdrops, we believe that it makes sense for United Engineers to privatise MFS to cut down on listing expenses.
After all, MFS continues to generate positive FCF despite weak operations and net cash has grown to
S$30m or about 1/3 of market capitalization.
It would not be an expensive deal for United Engineers to privatize MFS since it already owns 77%.
Source: DBS
It's all about "how much you made when you were right" & "how little you lost when you were wrong"