SALUTE (0183) - (Salutica) A Turnkey Manufacturer With Impressive Capability





 
Salutica is a one-stop turnkey electronic manufacturing provider. It is primarily involved in the design, development and manufacture of Bluetooth-related devices (such as Bluetooth headsets, smartwatches, car kits) as well as consumer electronic products (such as optical light guide, 3D glasses, electronic door locks, plastic parts for lighting) for external brands. The group is also involved in design and manufacturing of its in-house Bluetooth related products under the brand name “FOBO”. 
 
(Similar industry as VS, EG and SKP Resources)
 

 
The stock has been trading around RM1.80. However, on 29 May 2017, the company announced a weak set of result (huge drop in revenue as well as earning). Share price came under selling pressure and declined to around RM1.50. 
 

 
Recently, AmInvestment Bank has issued a research report with a lot of details regarding the company's operation. I am very impressed by the company's capability. So, I decided to take the opportunity to buy a little bit.
 

https://cdn1.i3investor.com/my/files/st88k/0183_SALUTE/pt/AMMB/0183_SALUTE_AMMB_2017-07-10_HOLD_1.70_SALUTICA%20-%20Proxy%20to%20Rising%20Adoption%20of%20Bluetooth_-619960761.pdf
 
Conclusion
 
In my opinion, there is no need to be too alarmed about the company's weak March 2017 quarterly result. It was mostly due to seasonal factor. Based on historical information, next quarter result is likely to rebounce strongly.
 
Based on market cap of RM582 mil and historical profit of RM26 mil (past 12 months aggregate), the stock is trading at PER of 22 times. Usually I don't buy stocks with such high PER. However, as mentioned above, I am very impressed by the company's capability. To get familiar with the stock, I decided to gain exposure by buying a little bit (it is very difficult to feel a stock if you don't own a stake in it).
 
Anyway, you never know, maybe in the not too distant future, they will announce a sizeable new contract that makes share price runs wild. There is never a best time to buy a stock like this. I don't mind buying a little bit to test it out.

http://klse.i3investor.com/blogs/light/127941.jsp