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I welcome any post concerning this company. Below is the
information that I received on 9/24/96. I have not heard much since.
Anyone else following this one?
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SEMICON TOOLS, INC. (SETO - OTC ) OUTSTANDING BUY
Shares Outstanding: 8,242,500
Approximate Float: 4,000,000
52 Week Range: $0.13-1.13
HISTORY
The semiconductor industry is a multibillion dollar industry which provides
the
chips for most electronic devices such as computers and microwaves.
According
to the Semiconductor Industry Association (SIA), chip sales are expected to
reach $233 billion by 1998.
This rapidly increasing demand for semiconductors is, in turn, creating a huge demand for the precision tools needed to cut wafers into chips.
Semicon Tools, Inc., well known in SE Asia and recognized in the U.S. as a high quality manufacturer with competitive prices, is one of the few manufacturers of these precision tools.
Semicon Tools, Inc., a thirteen year old Company based in Armonk, New York, primarily manufactures and distributes disposable diamond cutting tools essential to the microelectronics and semiconductor industries. Through East Coast Sales Company, Inc., a wholly-owned subsidiary, the Company also serves as a distributor and fabricator of industrial ceramic products and a distributor of "clean room" materials and supplies primarily used by the electronics and defense industries (e.g. items used to preserve a contamination-free environment).
PRODUCT LINE
Approximately 30% of Semicon's sales are attributed to Dicing Blades whichare used to cut integrated circuits from silicon wafers. It is important to realize that these wafers cannot be cut into chips without these blades and, therefore, the semiconductor industry is absolutely dependent on these precision tools.
Dressers and scribes account for 6-10% of Semicon's sales. Scribes are the precursors to dicing blades and are used to scratch wafer surfaces.
Dressers are diamond-tipped tools used to shape grinding wheels in machine shops and are sold by SETO mainly to Black & Decker Company and Snap On Tools.
The fabrication and distribution of industrial ceramic products account for 47% of the Company's total sales and include insulators, rods,tubes,machinable ceramics and labware.
Chips are made in "clean rooms" which are 3,000 times cleaner than hospital rooms. Semicon's clean room supplies account for 10-15% of the Company's sales and include materials used to construct and maintain clean rooms.
CUSTOMERS
Semicon Tools, Inc. has some very impressive customers including IBM,Motorola, General Motors, National Semiconductor, Coors, Westinghouse, Lockheed andTexas Instruments.
DEVELOPMENTS & GROWTH
SETO has established a strong presence in Malaysia, and through its "Manufacturing in Malaysia" agreement, Semicon has secured a manufacturing facility with a production capability of 30,000 blades per month. TheMalaysian companies involved in this agreement provide financing, while SETO originally provides the management and production expertise. In addition,Malaysian Government backed banks now provide machine grants, loans and credit
lines to create opportunities for innovative companies such as SETO.
SETO HAS LITTLE FINANCIAL RISK.
Semicon Tools has been featured in the Asian Wall Street Journal and praised by the Malaysian Government. In fact, SETO's President, Eugene Pian, was invited to be the sole non-Malaysian speaker at the Malaysain Government-sponsored seminar in New York, titled "Malaysia: Your Profit Center in Asia."
Semicon has a research and development joint venture with the University Science Malaysia which gives the Company unlimited access to the school's laboratories, equipment and human resources. This allows Semicon to achieve the highest level of analysis and testing while reducing the expenses ordinarily required to develop an R&D facility. As a result, the highest quality products are produced putting Semicon far ahead of others in the industry.
The first development project with the University to better control the
quality
and consistency of its Diamond Blades is now in the final stages. Testing
has
already been completed by a number of customers and has met with great
success.
Several other important projects are already in the works.
*In June 1995, Semicon established Diamond Tech International (DTI), a
joint
venture with several Malaysian companies enabling SETO to increase its
production capability. Recently, SETO acquired 100% ownership of this joint
venture adding $300,000 in assets and increasing revenues by $100,000 per
year.
In fact, this acquisition is expected to increase revenues for the
balance
of 1996 by $150,000.
According to a February 1996 article in Equities Magazine entitled "Semicon
Tools: Cut For Success", "With revenues of only $1.17 million for fiscal
1995, Semicon turned around two consecutive years of losses and now
projects
that with intended acquisitions, total net profit will surpass $3.2 million
in
1996 on sales of $33 million."
One of these intended acquisitions is Cablevision Technology Sdn Bhd
Malaysia
with whom an acquisition agreement has recently been signed. Expected to
close
within the next few months, this acquisition will increase revenues to over
$10
million for fiscal 1997.
In the event that this acquisition is not completed by January 1997, sales
for
fiscal 1996 are expected to be $1.7 million with a net profit of $160,000.
Cablevision Technologies is a Malaysian based manufacturer of consumer
electronic products whose revenues could reach $8 million this year. This
Company and Semicon Tools have had a formal relationship since October
1994,
when an agreement was signed making SETO its exclusive marketing and trade
agent in North and South America and Europe.
*As a result of Semicon's contract with Cablevision, production is now
beginning for products ordered in the first half of 1996, including four
models
of multi-use remote controls. In addition, a new "CPR Prompt"(tm),
endorsed
by the medical industry for public use, is currently in production in
Malaysia
for sales in the U.S. Management estimates that sales of this CPR Prompt
will
be several million units per year.
*Semicon Tools, through its East Coast Sales division, is the sole source
of
ceramic fabrication to a major supplier to the Aerospace industry. For the
first 6 months of 1996 sales of this product line were $130,000 as compared
with $120,000 for the entire year last year.
*The ceramics division is also experiencing tremendous growth as a result
of
increased terrorist threats to international security. A major Canadian
company
that manufactures explosion and drug detection devices primarily used in
airports and governmental agencies has placed significant orders with
SETO. Sales for this division are expected to grow at a rate of more than
50%
per year.
*Semicon's scribing tools are currently being tested for a new application
in
the optical industry which could increase sales of this product by 400%
over
the next 12 months. The first two tests have already been approved and
pre-production is in the final evaluation stage. Orders for full production
quantities are expected within the next two months.
The agreement with the University Science Malaysia has already resulted in
generating many new customers for the Dicing Blade product lines.
Management
expects 50+% growth rate for the balance of 1996 and 100% for fiscal
1997.
*Semicon's diamond/nickel blade has been accepted by the largest gem
cutting
company in Asia for cutting diamonds. This is a completely new industry
penetration for SETO. Mr. Pian estimates that this new area alone could
create
3-4 million dollars in revenues per year within a few years.
FINANCIALS
Total assets at the end of the fiscal second quarter ended July 31, 1996,
climbed by 50% over the first quarter to $1,285,343.
For the six months ended July 31, 1996 compared to the same period in 1995,
sales increased by almost 40% from $536,475 to $747,002.
*Semicon Tools, Inc. is an emerging growth company in an essential industry
with rapidly increasing demand. This Company has carved out a profitable
niche in a specialized area and is poised for significant earnings growth.
With the stock market gurus vascillating from 6000 on the Dow by year-end
to a
major plunge to the 5000 level, we've been looking for the Special
Situation
which we feel has the growth potential to ignore such market discord. Let
these
guys trade the S&P's till the cows come home, but for our money, Semicon
tools
is a TRUE GROWTH COMPANY.
We look for SETO to trade back over the $1.00 level medium term and 2 1/2-3
when the dust settles for fiscal '97.
Company Contact: Eugene Pian, President ( 914) 273-1400 or Paul Alper,
Consultant (201) 492-2208
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