PNE Industries Ltd (BDA.SI) is a leading EMS manufacturer of electronic controllers. The company furthermore manufactures and trades emergency lighting equipment under an own brand name. Electronic controllers are used in industrial and domestic electrical appliances, such as vacuum cleaners, coffee-makers, irons. In 2015, PNE Industries abandoned the loss-making printing operation.[mepr-active membership=”1734″ ifallowed=”show” unauth=”message” unauth_message=”Please login or purchase a membership to view full text.”]
The EMS segment contributes 84% to PNE Industries’ revenues. More than one-third of the revenues are generated in Poland and Hungary, followed by South East Asia (26%), and China (20%). And half of the sales come from two major customers. PNE Industries has manufacturing facilities in Singapore, Malaysia, China and the Netherlands.
PNE Industries was founded in 1999 and is headquartered in Singapore. The shares are listed on the main board of Singapore’s Stock Exchange since 2000. Major shareholder is the chairman and his family with an ownership of around 80%. 19% of the shares are in public hand.
With a workforce of around 1,200 employees, PNE Industries reported revenues of 49m SGD (29m USD) and profit before tax of 7m SGD (5m USD) in the first half of its fiscal year 2017. This is an increase of 12% and 16% respectively compared to the same period a year ago. In 2016, revenues and profits decreased by 1% and 3% respectively. The operating margin of 15% is around industry average. PNE Industries had cash reserves of 48m SGD (35m USD) at the end of March 2017, which is almost 50% of the total assets. The company shows a solid balance sheet with an equity ratio of 85% and no debts.
PNE Industries shares are in an uptrend since March 2015 and gained 150% in value since, 33% alone this year. After a peak in June this year, the share price has been consolidating above the rising 200-day moving average. The company is priced at nine times earnings compared to 23 times among its sector peers. The shares trade around book value and at eight times cash flow. The last dividend payment yielded almost 5%.
The 80% ownership of the majority shareholder and his family, the low valued assets, the high cash balance with no debts could be signs for a possible privatization or takeover target of the company in the near future. These signs are underpinned by PNE Industries’ disinvesting strategy over the past years as well as by the fact that the company does not point out any strategy outlook. In the case of a privatization or a takeover, the premium could be 20% to 30% over the latest share price then.
AIS Rating: ★★★★☆
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 Q1 only |
|
|---|---|---|---|---|---|---|---|
| EPS (SGDcents) | 2.9 | 6.7 | 4.5 | 10.2 | 8.6 | 19.3 | 7.4 |
| Change | -72% | 132% | -33% | 128% | -16% | 124% | 14% |
| P/E | P/E SECTOR |
P/B | P/CF | Equity Ratio* |
ROE | Debt/ Equity** |
Div YLD |
|---|---|---|---|---|---|---|---|
| 9 | 23 | 1 | 8 | 85% | 12% | 18% | 4.8% |
* Equity / Total Assets, ** Total Liabilities / Equity
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