Tai Sin Electric Limited FY18 Financial Results

Recently, Tai Sin Electric Limited had announced their full year financial statement for the year ended 30 June 2018. A dividend of 1.50 cents was also declared.

I have done My Personal Analysis on Tai Sin Electric Limited last year (2017) and have added this small cap stock to my wife’s stock portfolio. The stock price had declined slightly since I bought this stock for my wife. Cable & Wire business segment, which was the main revenue contributor to Tai Sin Electric Limited was affected by the increase in copper prices over the past quarters. This have caused their gross profit margins to be compressed.

Now, let us look at their FY18 full year results ended 30 June 2018.

Revenue

Revenue was higher by $44.889 million, up 16.05% to $324.542 million when compared to $279.653 million from the last financial year (FY17).

The revenue comes from four main business segments:

  1. Cable & Wire (C&W)
  2. Electrical Material Distribution (EMD)
  3. Switchboard (SB)
  4. Test and Inspection (T&I)

The Cable & Wire (“C&W”) Segment’s revenue posted an increase of $35.730 million, attributable to a surge in copper price and buoyed by higher delivery during the year.

Electrical Material Distribution (“EMD”) Segment’s revenue grew by $10.416 million, attributable to improved sales to the Building & Infrastructure, Electronic and Chemical, Oil & Gas Clusters as the segment began to get more orders from various projects.

Test & Inspection (“T&I”) Segment’s revenue was down by $1.228 million, primarily caused by decrease in Non-Destructive Testing and Heat Treatment revenue from Singapore and Indonesia as a result of
completion of projects and downturn in the oil and gas cluster. Laboratory test revenue which was affected by the pricing pressures due to stiff competition for fewer projects from the private sector in Singapore, also decreased.

Profit Before Tax

Even though Tai Sin Electric Limited reported a higher revenue, profit before income tax (“PBT”) declined $3.272 million. Profit before tax for FY17 and FY18 was $21.495 million and $18.223 million respectively.

Profit before tax of the C&W Segment was lower by $5.335 million as a result of lower gross profit margin, foreign exchange loss and higher staff cost.

The T&I Segment’s profit before tax decreased by $1.067 million because of intense competition and absence of gain on disposal of property.

The Switchboard Segment’s profit before tax declined by $0.093 million to $0.257 million.

Profit before tax from the EMD Segment increased by $3.211 million moving in tandem with higher revenue achieved during the year and higher share of profit from associates.

Cash Flow

The cash and cash equivalent at the end of the year dropped to $18.754 million compared with $22.081 million at the end of the previous year.

The Group’s net cash from operating activities is $0.116 million which at a glance is worrying.

As you can see from the financial statement above, trade receivables are still negative.

A negative adjustment related to accounts receivable means you sold more on credit than you collected from customers who owed you money. It means your profit or loss for the month includes sales that you have not actually collected the cash for yet.

We can also see that Tai Sin Electric Limited have also increased their inventories, further reducing the net cash from operating activities.

The Negatives

  • The High-speed rail project between  Kuala Lumpur and Singapore which I mentioned can be a possible catalyst was postponed by 2 years.
  • New property cooling measures implemented by the Singapore government in the 2nd half of 2018 underpinned construction and infrastructure activities in the Commercial and Residential sector. Competition is also stiff and intense in this sector.
  • The mounting trade tensions between the United States (“US”) and China and the US and Europe will throw uncertainty into the overall market.
  • Foreign exchange losses as US dollar strengthen against the SG dollar.

The Positives

  • Based on 6 month, copper prices have declined which benefits Tai Sin Electric Limited as their main business segment is Cable & Wire. This, however is still subjected to demand.
  • Facebook is building a data center in Singapore. This can be a possible catalyst as Tai Sin Electric has the expertise. Singtel Data Centre facility, one of Tai Sin Electric Limited’s past commercial projects, was equipped with a total power capacity of up to 36 megawatts, which is one of the highest power densities in the region.

 

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