SINGAPORE (Jan 10): After disposing of two out of three of its main businesses, Broadway Industrial Group looks to continue to explore new opportunities to further unlock shareholder’ value, according to CIMB Research.
The group sold its foam plastics solutions and flow control devices businesses to an American private equity fund in FY16 for $150 million.
It now focuses on the manufacturing of actuator arms and related assembled parts for the global hard disk drive (HDD) industry.
But the HDD business is facing some challenging conditions.
Revenue from Broadway’s HDD operations fell 7.2% to $373.7 million in FY16, mainly due to a global decline in HDD annual shipment volume.
“The group’s FY16 results were also negatively affected by the continued restructuring costs for the HDD business arising from consolidation of operations, redundancy, write-off of property, plant and equipment, as well as inventories,” says CIMB analyst William Tng in an unrated report on Tuesday.
However, the group seems to be reversing out of the red.
In 9M17, Broadway has turned a net profit of $0.6 million, compared to a net loss of $20.3 million in the corresponding period a year ago. Meanwhile, its revenue has climbed 2.6% in 9M17.
As at end-September, Broadway finds itself in a slight net cash position, with positive operating cash flow and free cash flow.
“Broadway plans to continue to optimise its operations, improve efficiency and productivity through further consolidation of operations, cost optimisation and right-sizing,” Tng says.
Even as its share price fell by 34.2% in 2017, Tng notes that Broadway is currently trading at 0.58 times of its book value per share of 21.3 cents as at end-September.
Shares of Broadway last closed at 12.5 cents on Monday.
