Based on the last quarter result ending 30th. September, Uchi Tech's revenue declined by 33% quarter to quarter comparison. As a result, its EPS has dropped by 32%. This is expected due to its heavy reliance on US and European markets. Nevertheless, its products target high end customers, who are recession proof unless a prolonged economic recession sets in. However, the good news is this company carries no bank borrowings in its balance sheet. Uchi has a cash of $121 million. In addition its inventories dropped by 18% while retained earnings rose from $72 million to $83 million. Its healthy balance sheet is enough to last 2 years of deep recession. Bear in mind also Uchi's product commands high (about 50%) profit margin.
In regards to institutional shareholding structure the list has not change, implying its long term sustainability:-
(a) Lembaga Tabung Haji 6.6%. They have been actively acquiring shares since November.
(b) ASB 5.5%
(c) ASW 2020 3.15%
(d) ValueCap 3%
(e) EPF 1.45%
(f) GIC of Singapore 0.9%
Notice the presence of ValueCap, ASB and GIC of Singapore. Assuming a drop of dividend to 15 cent this year, Uchi will still yield an astonishing 15.7% at a price of 95 cent! The sustainability of the dividend is almost certain due to its zero gearing and cash rich position. In addition, its major shareholders are also top managers of the company. This ensures that the interest of the shareholder is aligned to that of the manager. This is a classic principal agency theory and good corporate governance practices.
In regards to institutional shareholding structure the list has not change, implying its long term sustainability:-
(a) Lembaga Tabung Haji 6.6%. They have been actively acquiring shares since November.
(b) ASB 5.5%
(c) ASW 2020 3.15%
(d) ValueCap 3%
(e) EPF 1.45%
(f) GIC of Singapore 0.9%
Notice the presence of ValueCap, ASB and GIC of Singapore. Assuming a drop of dividend to 15 cent this year, Uchi will still yield an astonishing 15.7% at a price of 95 cent! The sustainability of the dividend is almost certain due to its zero gearing and cash rich position. In addition, its major shareholders are also top managers of the company. This ensures that the interest of the shareholder is aligned to that of the manager. This is a classic principal agency theory and good corporate governance practices.
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