PCI Ltd - CIMB Research 2018-01-15: Management Positive On Outlook For Next 3-6 Months

PCI Ltd - CIMB Research 2018-01-15: Management Positive On Outlook For Next 3-6 Months PCI LIMITED P19.SI

PCI Ltd - Management Positive On Outlook For Next 3-6 Months

  • PCI Limited (SGX:P19) is an electronics manufacturing company with design expertise. PCI is able to handle low-to-high volume projects. The company had a net cash balance sheet at end-Sep 2017.
  • In its 1QFY6/18 results commentary, PCI guided that the group's business could benefit from positive economic sentiment in the next three to six months. The directors are also cautiously optimistic about the group’s business outlook beyond the next six months.
  • PCI is trading at a historical FY17 P/E of 13.0x versus the local tech manufacturing services sector’s historical average of 18.2x.



Established electronics manufacturing specialist 

  • PCI Limited was listed on the then Sesdaq of the Singapore Exchange Securities Trading Limited (SGX-ST) in May 1992. The company later transferred to the Mainboard of the SGX-ST in May 1995. 
  • PCI has more than 40 years’ experience in delivering high-quality end-to-end manufacturing supply chain solutions to its customers. PCI is able to offer design, manufacturing engineering, material sourcing and procurement, assembly, testing and logistics.


Able to handle low- to high-volume projects 

  • PCI is headquartered in Singapore and its major manufacturing facilities are in Batam, Indonesia and Kunshan, China. The company is able to handle low- to high-volume projects. Its specialities include networking, wireless communications, home appliances, display modules for mobile communications, medical, industrial and automotive products.


Value adding with in-house design expertise 

  • PCI Limited owns engineering design and development centres in Singapore, Manila, the Philippines and Bandung, Indonesia, giving it complete control over the development process. 
  • Its centres are capable of producing global positioning systems, radio frequency, liquid crystal display modules, control panels, printed circuit boards and mechanical design.


Cautiously optimistic on the next six months 

  • In its 1QFY18 (Jul-Sep 2017) results commentary, PCI stated that the electronics industry is experiencing a pick-up mainly due to the year-end seasonal demand and optimism about economic growth. 
  • While the group's business could benefit from this positive sentiment in the next three to six months, the directors are also cautiously optimistic about the group’s business outlook beyond the next six months.


Net cash balance sheet; 50% payout policy 

  • PCI had net cash (zero borrowings) of S$45.5m on its balance sheet at end-Sep 2017 or 24.7% of its market cap on 12 Jan 2018. 
  • PCI endeavours to pay up to 50% of its net profit as dividends and has been paying dividends since FY13. 
  • PCI is trading at a historical FY17 P/E of 13.0x versus the local tech manufacturing services sector average of 18.2x. Its historical FY17 P/BV is 1.59x versus the sector average of 2.30x. PCI’s historical FY17 dividend yield is 6.49%.



NOT RATED
Target Price: N/A






Read Also: SG Tech Manufacturing Services Sector - Unearthing The Laggards


William TNG CFA CIMB Research | http://research.itradecimb.com/ 2018-01-15
CIMB Research SGX Stock Analyst Report NOT RATED Maintain NOT RATED 99998 Same 99998


* This Eyes On the Ground report represents a preliminary assessment of the subject company, and does not represent initiation into CIMB's coverage universe. It does not carry investment ratings and CIMB does not commit to regular updates on an ongoing basis.



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