Deswell Industries (DSWL) Message Board

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Technology Stocks : Deswell Industries (DSWL)

DSWL 3.480

-0.9%

Nov 14 9:30 AM EST

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To: Madharry who wrote (814)	6/26/1998 2:55:00 PM
From: Ron Bower	Read Replies (1) of 1418

Armin, Someone reads my posts and catches my errors. It is 'double counting' the way I stated it. I just threw out some numbers off the top of my head at the end of the post. I normally figure on a five year growth and didn't have two year numbers. I had made it a practice to add the dividends back to earnings for a quick calculation of cash flow as the dividends approximate the depreciation they are taking. It also gives me a better picture of the actual value of the company (vs. BV). One of the ridiculous things about the market perception of Deswell is that it's a high return/high risk stock when it actually is one of the lower risk/lower return stocks because of the dividends. If the dividends were left in the BV it would be reflected in the stock price. By giving investors a return on their monies in cash, the price appreciation is less and the risk much lower. Example: Using 20% growth on earnings of $2.37 and price at 2xBV, with no dividends Deswell would have a BV around $19.85 in five years and be selling around $39.70. Because they issue dividends, the BV would be around $14.85 and the price at $29.70 with investors receiving $5.00 in cash. A $5.00 lower return, but far less risk because one's position in the stock is reduced. IMO -The dividends offset the risks of investing in China, particularly when they have maintained the percentage of payout. This is a very conservative company owning no property with all assets in cash and equipment that can be moved out of China if need be. It's obvious they are hedging against any political upheaval. I have seen posts where some think that Deswell is worth $40-50.00. That would be a very high multiple to BV and IMO it isn't going to happen for at least 3 years. This isn't a speculative stock, it's a value stock. Anyone looking for a big surge in the price is in the wrong company. IMO - If one is looking for a long term investment providing a return that will beat the market and moderate risk, Deswell is a good place to invest. Ten years or so from now, it can provide nice asset appreciation and income. That looks good to me. JMHO, Ron

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