Trek 2000 International Ltd (5AB.SI) is an inventor and patent owner of the ThumbDrive USB flash drive. The company develops and sells digital products and solutions such as USB flash drives, wireless SD cards (Flucard), security solutions and WiFi memory modules for embedded devices.[mepr-active membership=”1734″ ifallowed=”show” unauth=”message” unauth_message=”Please login or purchase a membership to view full text.”] Trek 2000 International owns more than 420 patents and trademarks in different technological fields.
Trek 2000 International intends to play a leading role as a solutions provider for the Internet-of-Things (IoT) ecosystem. The company’s focus for new developments lies on Medical Technology (Medtech), Wearable Technology and Cloud Technology. By embedding devices with proprietary software and sensors, Trek 2000 International aims to leverage on its Smart Gateway- and Cloud-platforms to seamlessly collect and exchange data.
The MedTech industry is expected to grow at 6 percent to 300bn USD this year. Moreover, the market for wearable technology, such as smart bodywear, fitness and medical devices, wearable scanners and computing devices for warehouse, logistics, and other industrial operations, is predicted to grow at a rate of 18 percent annually to 31bn USD by 2020. The global IoT marketplace is expected to reach 1.3tr USD by 2020. More than 8bn ‘things’ will be connected worldwide in 2017 and more than 20bn by 2020, according to market research firm Gartner. This seems like endless possibilities in a world where Trek 2000 International is well placed to capture prevailing industry trends and capitalize on growth opportunities.
Despite intense competition within the technology industry, Trek 2000 International grew sharply in China, Hong Kong, Malaysia and Taiwan. These countries account together for 80 percent of the company’s revenues today. Trek 2000 International depends currently strongly on three customers, which accounted for 55 percent of the revenues in 2016.
Trek 2000 International was founded in 1996 and is headquartered in Singapore. The shares are listed on the main board of Singapore’s stock exchange since 2000. The company’s shares can also be traded in Germany. Major shareholder is the chairman and CEO, Mr. Henn Tan, with an ownership of around 31 percent, followed by the Toshiba Corporation with an ownership of about 16 percent. 34 percent of the shares are in public hand.
With a workforce of 82 employees, Trek 2000 International reported revenues of 100m USD and profits before tax of 6.6m USD over the first nine months of 2017. Revenues decreased by 20 percent as a result of the disposal of a stake in Racer Technology Pte Ltd this March, a manufacturer of plastic products. The company was divesting the stake to focus on its core electronics and technology business. Profits, on the other hand, increased by 61 percent compared to the same period a year ago.
Despite intense competition within the technology industry, Trek 2000 International revenues grew continuously over the last three years. In 2016, revenues and profits increased by 11 percent and 206 percent respectively. Just the operating margin of 8 percent remains below sector peers. Trek 2000 International had cash reserves of 34m USD at the end of September 2017, a resource that could be capitalized on business opportunities and further growth. The company shows a solid balance sheet with good profitability and financial strength. The equity ratio is at 76 percent and the gearing, defined here as total liabilities to total equity, at 32 percent.
Trek 2000 International is under investigation due to suspicious transactions since April last year and was suspended from trading its shares for more than a year. The stocks just resumed trading in September and soared around 50 percent in value since. The company is priced at nine times earnings. The shares trade at 1.4 times book value and at three times cash flow only. The company did not pay a dividend for 2016.
Despite the current investigation we believe in the innovation power of Trek 2000 International. The latest reporting shows very promising developments and a healthy balance sheet. The current valuation leaves room for at least 30 percent share price increase over the next six months.
AIS Rating: ★★★☆☆
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 Q1-3 only |
|
|---|---|---|---|---|---|---|
| EPS (SGDcent) | -1.8 | 0.3 | 0.7 | -2.2 | 1.9 | 1.7 |
| Change | -440% | 119% | 106% | -407% | -187% | 53% |
| P/E | P/E SECTOR |
P/B | P/CF | Equity Ratio* |
ROE | LIAB./ Equity** |
Div YLD |
|---|---|---|---|---|---|---|---|
| 9 | 18 | 1.4 | 3 | 76% | 18% | 32% | n/a |
* Equity / Total Assets, ** Total Liabilities / Equity
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