In an unrated report out today, CIMB says group chairman Thomas Chua is the key figure driving Teckwah’s transformation and development. He is a member of Singapore’s 12th and 13th Parliament and served two terms as president of Singapore Chinese Chamber of Commerce & Industry in 2013-17.
Present in 102 global locations, Teckwah serves mainly MNC customers in the IT, pharmaceutical, lifestyle electronics and F&B sectors, including big names like Philips, Panasonic and Meiji.
Given its service-focused nature, the non-print segment enjoys a higher operating margin compared to the manufacturing business. Today, the non-print segment is Teckwah’s biggest profit contributor, making up 65% of group FY16 EBIT.
In FY16, group core EBIT also hit new highs of $19.1 million as it relocated to its new headquarters at Pixel Red in Paya Lebar iPark. It also moved its high-volume print and package activities to its new Iskandar factory and upgraded its China and Indonesia facilities.
As end FY16, Teckwah has balance sheet of $28 million from a net debt of $7 million at end FY14.
In FY16, Teckwah declared total dividend to 2.0 cents, comprising a 0.5 cent interim and 1.5 cents final. This translates into FY16 dividend yield of 3.9% and a payout ratio of 34%.
Teckwah trades at 9.6x FY16 core P/E and 0.81x FY16 P/BV. Its FY15/16 free cash flows of $16.7 million/$26.1 million were higher than its net profit of $12.4 million/$13.7 million.
Shares of Teckwah are down 2 cents at 52 cents.
