Monday, April 4, 2016

Fischer Tech Ltd - Misses Happened

It has been some time since I put up a stock that passes Triple S Scorecard.

So here is a stock that pass the Triple S Scorecard and one that I have watch-listed since it was at 0.850 per share during last September 2015.

In the end, I am only able to get 200 shares at 0.905 per share. Thus, to me, I deem that I have missed out on this stock as it has now rise to 1.005 per share.

Profile in Short

Fischer Tech Ltd manufactures and sells precision engineering plastic components for electronic products in China, Singapore, Thailand, and Malaysia. It operates through two segments, High Precision Plastic Injection and Mould Design and Fabrication. The company offers precision plastic injection molds, high precision injection molding, laser marking, and decorative finishing for engineering components of automotive, computer peripherals, healthcare, and consumer product industries. It also develops 2-shot injection molding, thin-wall injection molding, Neo dynium-yitrium aluminum garnet laser marking, in-mold labeling, and cosmetic molding technologies. Fischer Tech Ltd was founded in 1994 and is based in Singapore. Fischer Tech Ltd is a subsidiary of Harmony (S) Holdings Pte Ltd.

Based on the Triple S Scorecard:


Why So Good?

Plastic Component - I believe oil is part of the raw materials required for plastic. As oil has fall to below $40 per barrel, I believe this will reduced the cost of goods sold for this company. Thus, in the next 2 years, I believe the net profit will rise in view that the cost of goods sold has reduced.

Automotive segmentation - Automotive segment contribution to revenue has increased to 81.5% for the 2Q 2015. Fischer Tech Ltd seem to be the "go to company" for Automotive plastic component. We know that Singapore will be scraping about 500k of cars by 2017 due to the end of the 10 year COE period. Singapore, being the car crazy country, will definitely boost the revenue of car companies in 2016 and 2017. Therefore, this may indirectly result in a significant increase in revenue from 2016 to 2018 for the company.

Very Little Debt and Pass Triple S Scorecard - Yes. This stock pass the Triple S Scorecard with 11 points.

Turnaround since 2013 - If you look at the Triple S Scorecard, you will realised the company only has a 0.01% of net profit margin in 2011 and negative 8+% of margin losses in 2012. However, after 2013, the company started to achieve significant net profit of above 3.5% since 2013. Thus, something must have gone right there, right? If the company continue to perform similarly, the net profit should continue to rise. Thus, the asset value will rise and then the possibility of increased dividend.

Why So Bad?

Sunset Business - The company is in precision engineering of plastic. This is a business that is very easily replaced by others unless you have signed long term contracts with your customers. Furthermore, manufacturing sector has been performing badly within the Singapore economy. Thus, this is a question investor need to ask themselves when they intend to purchase the stock - How long can they hold the shares?

Rise in Stock Price - I have seen the stock rise from 0.850 per share to 1.005 per share and I think that is too fast and furious. I am unable to convince myself if there are better opportunities out there as there will definitely be more volatility ahead.

Loss in 2012 - Furthermore, I am unable to acertain why the stock did not make any money in 2012 and what happen after that. Thus, I decided against investing in this stock.

In Short

My conclusion is that I hate SGX for changing the number of shares per lot from 1000 shares to 100 shares. If only I have at least 1000 shares, I will be making a small gain now, rather than a loss due to TRANSACTION FEE,

Anyway as stated, I believe the rise in the stock price is too fast and I will not be adding any of this stock in the meantime.

Current Price: 1.005 as of 4 April 2016.

Please do your own due diligence before you invest in this stock.

Do note the author is vested in this stock/company at 0.905 for only 200 shares.

2 comments:

  1. Hi, the problem with this stock is low liquidity resulting wide spread in bid/ask price. It has been in my watchlist for a long time. I am still not vested due to high transaction fee if one can only manage to buy a small qty. After share consolidation, trading volume is even lower nowadays,

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    Replies
    1. Hi Simple Investor,

      Guess that is the issue with most stock nowsadays - Share consolidation. Makes every stock so illiquid creating a wide spread between the bid/ask prices.

      Guess its hard to go in unless there is some stock split along the way.

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