SINGAPORE (April 12): CIMB likes Teckwah for its evolution from a paper box maker into a successful supply chain provider.
Founded in 1968, Teckwah now offers a full suite of services including printing and packaging, logistics, supply chain management.
In an unrated report out today, CIMB says group chairman Thomas Chua is the key figure driving Teckwah’s transformation and development. He is a member of Singapore’s 12th and 13th Parliament and served two terms as president of Singapore Chinese Chamber of Commerce & Industry in 2013-17.
Present in 102 global locations, Teckwah serves mainly MNC customers in the IT, pharmaceutical, lifestyle electronics and F&B sectors, including big names like Philips, Panasonic and Meiji.
Given its service-focused nature, the non-print segment enjoys a higher operating margin compared to the manufacturing business. Today, the non-print segment is Teckwah’s biggest profit contributor, making up 65% of group FY16 EBIT.
In FY16, group core EBIT also hit new highs of $19.1 million as it relocated to its new headquarters at Pixel Red in Paya Lebar iPark. It also moved its high-volume print and package activities to its new Iskandar factory and upgraded its China and Indonesia facilities.
As end FY16, Teckwah has balance sheet of $28 million from a net debt of $7 million at end FY14.
In FY16, Teckwah declared total dividend to 2.0 cents, comprising a 0.5 cent interim and 1.5 cents final. This translates into FY16 dividend yield of 3.9% and a payout ratio of 34%.
Teckwah trades at 9.6x FY16 core P/E and 0.81x FY16 P/BV. Its FY15/16 free cash flows of $16.7 million/$26.1 million were higher than its net profit of $12.4 million/$13.7 million.
Shares of Teckwah are down 2 cents at 52 cents.
