LETS JOIN KIM'S STOCKWATCH GROUP?
Date : 05 March 2021
UCHI TECHNOLOGIES BERHAD (UCHITEC)
WHAT KIM SAY?
"UCHI develops and manufactures products for laboratory and industrial instrument applications such as precision weighing scales, deep freezers, centrifuges, and pipettes. Their clients include Sartorius Group, based in Germany (FY2019 Revenue was €1,827m), and Eppendorf, a leading life science German company."
WHY I PICKED THEM AS A GEMS?
"I like Uchi for its strong relationship with its key customer and how it remains the sole supplier of its coffee modules. Its customer, which manufactures deep freezers used within the vaccine logistics supply chain, could provide a near-term earnings catalysts" - Kim
On news 14th December 2020 - SLS and Eppendorf to supply ultra-low temperature freezers for UK COVID-19 vaccines | SelectScience
SLS and Eppendorf to supply ultra-low temperature freezers for UK COVID-19 vaccines
Uchitec has zero borrowing
Back in 2017, Uchitec had even more cash, standing at RM243 million. In 2018, management thought it was not necessary to hold so much of cash, therefore about RM90 million was paid back to shareholders as capital repayment
Revenue and Earnings Surged Further in 4Q204Q20 revenue and core profit surged by 33% and 41% qoq respectively, even after the strong previous quarter, which had recovered from order backlogs due to production halts during the Movement Control Order (MCO) in 2Q20. With the strong revenue and hence better operating leverage coupled with favourable revenue mix, EBITDA margin further improved by 2.9ppts qoq. Overall, this has been the strongest quarter ever reported by Uchi, both in terms of revenue and profit, which we believe is being underpinned by strong demand for household appliances spurred by the work-fromhome trend.
2020 Results Above Expectations, DPS Ahead of ExpectationsCumulatively, Uchi’s 2020 core profit of RM85m (+10% yoy) came in above expectations, accounting for 120% and 124% of our and the street’s full-year estimates respectively. Revenue in US$ terms had contracted by 1.8% yoy and we believe this was also better than management’s earlier revenue guidance of a single-digit decline. The earnings surprise was largely due to a combination of better-than-expected revenue and EBITDA margin. DPS for the full year amounted to 17 sen (FY19: 16 sen), which was also a positive surprise.
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