On 28 August 2024, Tai Sin Electric Limited (“TSE”) have announced their full year result for FY2024. Their results were affected by the semi-conductor downturn, though management have disclosed that their results for the second half of FY2024 have seen improvements. This may translate to better performance for the next financial year, which could be a good indication of stability as despite the lowered performance, their earnings per share is sufficient to sustain their current dividend payout.
Website: Financial Statements And Related Announcement::Full Yearly Results
Photo source: https://www.taisin.com.sg/about-us/
Background
TSE is a Singapore-based investment holding company. The Company is engaged a cable and wire manufacturer and dealer in such products. Listed on the Stock Exchange of Singapore Catalist (formerly known as SESDAQ) in 1998, the Group was subsequently transferred to the SGX Main Board in 2005. Its operating segments include Cable & Wire (“C&W”), Electrical Material Distribution (“EMD”), Switchboard (“SB”), Test & Inspection (“T&I”).
TSE’s Cable business builds its success on the aggressive development and marketing of a comprehensive range of high-quality cables through a distribution network serving a diverse range of industries, while maintaining strong partnerships with reputed consultants and main contractors. Working together, they provide competitive electrical cabling and wiring solutions for both the private and public sectors in all categories of industrial, commercial, residential and offshore & marine projects.
To cater for the robust growth in the regional market, TSE operates three cable manufacturing plants. They are located in Singapore, Malaysia and Vietnam, all of which are fully equipped with the latest manufacturing facilities and technologies to meet increasing demands.
TSE is strongly committed to making continual advancements in technology and innovation, both of which are their greatest strengths. Their ISO 9001, ISO 14001 and OHSAS 18001 certifications and conformity to various world-class standards are solid testimonies in their efforts to achieve excellent quality in both their manufacturing process and products.
Financial highlights
Revenue
| Metrics | Current | Previous |
|---|---|---|
| Revenue | -5.0% | -14.8% |
Revenue decreased by 5.0% to SGD400 million compared to SGD421 million in the previous financial year. This metric remains Unfavorable. The decrease was still mainly due to completion of projects as well as being affected by the semiconductor cyclical downturn, unchanged from the previous half year results
Earnings per share
| Metrics | Current | Previous |
|---|---|---|
| Earnings per share | -12.4% | -42.1% |
With the other expenses remaining relatively unchanged, the decrease in revenue caused profit to decrease by 12.3% to SGD14.7 million from SGD16.8 million in the previous financial year. Similarly, earnings per share decreased by 12.4% to SGD0.0317 per share from SGD0.0362 per share. This metric remains Unfavorable as well.
Operating Cash Flows
| Metrics | Current | Previous |
|---|---|---|
| Operating Cash Flows | -85.6% | +56.4% |
Operating cash flows generated have decreased by 85.6% to SGD2.6 million from SGD18.1 million in the previous financial year. The reason for the significant decrease was mainly due to the significant increase in trade receivables. This metric has shifted to Unfavorable, and investors should keep an eye out for any potential allowance for trade receivables.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing ratio | 32.6% | 31.2% |
With effect from April 2024, my articles will be shifting the metric for this section from debt-to-equity ratio to gearing ratio. This will allow readers to have an easier comparison with Real Estate Investment Trusts (“REITs”) and determine the amount of financing each Company is using. Gearing ratio was 31.2% as of 31 December 2023, with total assets of SGD303 million and total liabilities (excluding provision for onerous obligations) of SGD95 million.
Gearing ratio for 30 June 2024 increased to 32.6%. This is computed excluding the provision for onerous contracts of SGD4.1 million, with total assets and the total liabilities (excluding provision for onerous obligations) amounting to SGD315 million and SGD103 million respectively. This metric is Favorable.
| Financial | SGD’000 | Adjusted SGD’000 |
|---|---|---|
| Total Assets | 315,662 | 315,662 |
| Total Liabilities | 107,012 | 102,935 |
| Total Equity | 208,650 | 212,727 |
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest coverage | 10.0x | 9.7x |
The interest coverage stands at 10.0 times as of 30 June 2024, using profit before tax of SGD20.4 million and finance costs of SGD2.2 million. The metric is Favorable, as TSE currently generates profits to ensure sufficient interest coverage and is higher than my required coverage of 3.0 times.
Price-to-book ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 0.89 | 0.90 |
The Price-to-book (“P/B”) ratio for TSE is 0.89. This is computed based on the closing share price of SGD0.400 as of 6 September 2024, and the Net Asset Value (“NAV”) of the Group of SGD0.450 per share as of 30 June 2024. This is Favorable as it translates to paying a discount for TSE business.
As of 6 September 2024, the Market Capitalization is approximately SGD184 million.
Dividend
| Year | Yield | Total |
|---|---|---|
| 2024 | 5.88% | SGD 0.024 |
| 2023 | 5.88% | SGD 0.024 |
| 2022 | 5.88% | SGD 0.024 |
| 2021 | 5.63% | SGD 0.023 |
| 2020 | 3.75% | SGD 0.015 |
With the final payout in November 2024 of SGD0.0160 per share, the dividend for the calendar year 2024 remains consistent to the previous years of SGD0.0235 per share. With a closing share price of SGD0.400 as of 6 September 2024, this translates to a yield of 5.88%. For my benchmark, a general reasonable yield would be around 5.75%. TSE’s dividend yield is above my benchmark and is Favorable.
Website: Reasonable Dividend Yield 2024Q3 – 5.75%
With the exception of 2020 due to Covid-19, TSE have been distributing relatively constant dividends throughout the years. With a favorable dividend yield, this is comparable to Real Estate Investment Trusts (“REITs”) whose mandates are to distribute majority of their earnings as dividends.
Summary
| Metrics | Financials | Rating |
|---|---|---|
| Revenue | -5.0% | Unfavorable |
| Earnings per share | -12.4% | Unfavorable |
| Operating Cash Flows | -85.6% | Unfavorable |
| Gearing ratio | 32.6% | Favorable |
| Interest coverage | 10.0x | Favorable |
| Price to Book Ratio | 0.89 | Favorable |
| Overall | Neutral |
Overall, the metric states that it remains Neutral to invest in TSE. The full year result is affected by the ongoing semi-conductor industry downturn, and investors will need to see if recovery will occur over the next few months. As of the date of this article, TSE is still a reliable defensive stock, with strong fundamentals, generating sufficient earnings per share to sustain their dividend payouts.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
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Website: Tai Sin Electric Limited (SGX: 500): 2024 Half Year Result
