CEI3.16CEI Contract Manufacturing Limited (CEI SP) is a contract manufacturer providing printed circuit board and box-build assembly services.

The company serves a diverse base of customers in the industrial equipment market, in sectors ranging from life sciences, medical technology, aviation, industrial, oil and gas and semiconductor.


FY15 dividends 10 c / share
Share price
(14 March 2016)
67.5 c
Trailing dividend yield 14.8%
CEI stands out among other CMs with its unique business model of a highmix, low-volume strategy, and is often the single-source or most costefficient supplier of niche components for its customers.

This approach, combined with a competitive cost structure, has encouraged a high level of customer stickiness and above-industry margins. Operating from its manufacturing facilities in Singapore, Batam and Vietnam, the company’s factory utilisation currently stands at 70%, giving it ample capacity to take on new businesses without much additional overheads.



FY15 net profit surged 109% to S$10.8m even as its revenue grew just 9%, driven by a rise in operating margin from 6.3% to 10%.

The company is focused on broadening its range of services from beyond an electronics house to a full-fledged contract manufacturing with box-build and mechanical capacities, and is open to M&A possibilities or joint-ventures with like-minded partners.

Goh Han Peng"CEI has a cash-generative business model and historically has paid out 70- 80% of its profits as dividends"

-- Analyst Goh Han Peng (photo)

While the slowdown in the oil and gas sector has taken a toll on its forward orderbook, which is down by some S$10m compared to a year ago, its diversified customer base and growing momentum in its fledging equipment business should help to mitigate some of the shortfall.

CEI has a cash-generative business model and historically has paid out 70- 80% of its profits as dividends.

Based on last year’s payout of S$0.10/share, the stock is trading at a trailing yield of 15% and a historical P/E of 5.4x.

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Comments  

#1 Catguo 2016-03-17 05:06
I just read this.luckily I brought 59000 shares for the last 3 days based on my conservative valuation of $1.2 per share.

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