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Stock Review – UCHITEC (7100) (UCHI TECHNOLOGIES BERHAD) - 2

Bursa Malaysia - 7100
Bloomberg - UCHI:MK
Yahoo - 7100.kl

Sector            : Industrial Product and Services
Sub Sector    : Industrial Materials, Components and Equipment
Focus            : Original Design Manufacturing (Electronic Control System)

Company Profile

UCHI Technology Berhad (UCHITEC) is principally involved in Original Design Manufacturing (ODM), specializing in the design of electronic control system. Uchi designs and develops electronic control modules in-house and eventually manufactures and assembles components into semi finished parts and control modules which its customers will insert into their final products. UCHITECH module are used in fully automated coffee machines, precision weighing scales, centrifuges and deep freezers).

UCHITECH has two operating site

  1. UOM situated in Malaysia is the main operating plant (>85 % Utilisation as of  2019 annual report)

  2. Uchi Donggguan in Dongguan City, Guang Dong Province China, is the assembly arm of UOM. (<75 % Utilisation as of 2019annual report)

UCHITECH consists of three operating segment which are:

  1. Investment holding (includes management services)

  2. Manufacturing  of real time centralised energy measurement and control system, high precision hot fluid temperature control system and ultra low temperature and mass sensing control system for bio-chem equipment, touch screen advance display, high precision light measurement (optoelectronic) equipments, mixed signal control system for centrifuge / laboratory equipments, mixed signal microprocessor based application, system integration products and electronic modules.

  3. Trading of complete electrical module and saturated paper for PCB lamination.

Of the three operating segments, only the manufacturing segment (70 % of 2019 total revenue)is for the external sales while the two other segments are for inter segment sales.

Income Statement


31 Dec 2020

31 Dec 2019

31 Dec 2018

31 Dec 2017

31 Dec  2016

Revenue

155,260,000

156,670,000

139,970,000

136,590,000

120,900,000

Earning Before Tax

84,650,000

79,040,000

72,540,000

72,150,000

57,090,000

Nett Profit

83,830,000

75,950,000

69,010,000

70,500,000

55,510,000

5 Years CAGR of Revenue

5.13 %

5 years CAGR of Nett Profit

8.19%


UCHITEC 5 years CAGR of Nett Profit (8.19 %) is higher than its 5 years CAGR of revenue of 5.13 % mean UNCHITEC might have reduced its operating expense and interest expense over the 5 years. Despite pandemic in 2019 which bad affected the operation of UCHITEC in Malaysia and China on the first half of year 2020, UCHITEC managed to match the 2019 revenue in 2020 and recorded the highest nett profit in 5 years for year 2020. Besides pandemic, the weakening of US dollar would also affect UCHITEC revenue and net profit for the year 2020.


With the recovery of economy in the world for this year, UCHITEC might  perform 


Balance Sheet



31 Dec 2020

31 Dec 2019

31 Dec 2018

31 Dec 2017

31 Dec  2016

Current Ratio

2.78

2.56

2.30

2.59

4.50

Cash / Current Asset

79.28 %

80.00 %

74.10 %

89.20 %

88.37 %


UCHITEC had maintained a high current ratio for the past 5 years. About 80 % of UCHITEC current assets are in cash and short investments. There is a significant drop in cash / current asset ratio from 89.20 %  to 74.10 % in 2018 was due to higher interim dividend declared by the management on Dec 2017 which was paid on January 2018.


Asides that, UCHITEC does not have any debt and good will.


Cash Flow



31 Dec 2020

31 Dec 2019

31 Dec 2018

31 Dec 2017

31 Dec  2016

Cash Flow from Operation

85,700,000

84,050,000

63,370,000

68,340,000

55,840,000

Cash Flow from Investing

2,460,000

2,290,000

6,760,000

5,720,000

2,730,000

Cash Flow from Financing

-68,110,000

-62,080,000

-198,810,000

-31,260,000

-32,220,000

Free Cash Flow

85,020,000

83,310,000

54,140,000

67,230,000

52,920,000

5 years CAGR of Cash Flow from Operation

8.94 %

5 years CAGR of Free Cash Flow

9.95 %


UCHITEC had healthy operating cash flow with a 5 years CAGR of 8.94 %. Besides that, UCHITEC had 5 years CAGR of free cash flow of 9.95 % mainly due to low capital expenditure. Low investment activities over the 5 years also show in the positive cash flow from investing activities. Since UCHITEC had low or no debt, its cash flow from financing is mainly due to paying dividends to shareholders.


Per Share Analysis



31 Dec 2020

31 Dec 2019

31 Dec 2018

31 Dec 2017

31 Dec  2016

Share Outstanding 

451,430,000

449,110,000

448,680,000

447,100,000

436,620,000

Price 31 December

2.6

2.78

2.54

3.099

1.619

BV/Share

0.40

0.36

0.34

0.53

0.58

P/E

14.00

16.44

16.51

19.65

12.73

5 years CAGR of Price

9.94 %


UCHITEC book value per share had dropped significantly due to dividend payout. UCHITEC book value per share had growth from 2018 to 2020.


UCHITEC price had growth at 5 years CAGR of 9.94 % which is faster than its cash flow from operation (8.94 %) and same rate with UCHITEC 5 years CAGR of free cash rate (9.95 %). P/E for 2020 is lower than the 5 years average of  15.86.


Dividend



31 Dec 2020

31 Dec 2019

31 Dec 2018

31 Dec 2017

31 Dec  2016

Dividend Per Share

0.16

0.145

0.15

0.25

0.11

Dividend Payout

86.61 %

85.74 %

97.52 %

158.55 %

86.52 %

Dividend Yield

6.15 %

5.22 %

5.91 %

8.07 %

6.79 %

10 year Malaysia Government Bond

2.68 %

3.33 %

4.01 %

3.94 %

4.24 %


Aside in 2017 where dividend payout is at 158.55 %, UCHITEC had a dividend payout between 85 % to 97 % for the past 5 years. Besides thatUCHITEC has a dividend yield higher than 10 years Malaysia Government Bond.


Research Report


Investment House

Date

Target Price

AFFIN HWANG CAPITAL

25 February 2021

RM 3.88

Average Price Target


RM 3.88


Only one research house has analysts UCHITEC with the target price of RM 3.88


Peer Analysis



UCHITEC

EG

UNISEM

VS

FPGROUP

P/E

17.76

-36.71

41.23

38.42

34.93

Dividend Yield

4.88 %

0 %

0.82 %

0.95 %

0.63 %


UCHITEC had P/E lower than its peer and dividend yield much higher than its peer which only gave less than 1 % dividend yield.


Technical Analysis


UCHITEC daily chart is testing resistance RM 3.30.


UCHITEC weekly chart also shows a resistance at RM 3.3.



http://ivkls.blogspot.com/2021/03/stock-review-uchitec-7100-uchi.html

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