Quick review: Current rating from La Guardia GFS
Strong Buy and Hold
After reviewing the SETO's annual SEC Filing, (to read the 10k: stidiamond.com we found that the earnings before these one time expenses would have been around $200k higher than those reported, therefore placing the EPS around .045 which should be used reflect a true valuation of the stock price. At a reasonable P/E ratio of 30 times earnings, this would give the stock a current valuation of $1.35/share. At a more appropriate P/E of 40, this stock should be trading around $1.80/share. Therefore we continue to believe this stock is "EXTEREMLY UNDERVALUED."
Corporate Overview
SETO Holdings, Inc. (OTC BB: SETO) based in Briarcliff Manor, New York has been a publicly listed company for twelve years. The company's core business is comprised of manufacturing and distribution of technical and consumer products.
With an established presence in Malaysia for ten years, SETO Holdings, Inc. has complete manufacturing and distribution facilities. This Malaysian presence is significant in that SETO Holdings, Inc., has a reliable low cost source of supply which allows the Company to satisfy its dicing blade orders with a production capability up to 30,000 blades per month, a full technical ceramic fabrication facility and the ability to manufacture all models of cellular phone batteries.
SETO Holdings, Inc.'s technical product group has an impressive client base. They sell their products to numerous Fortune 500 Semiconductor clients including IBM, National Semiconductor, Motorola, General Motors, Coors, Westinghouse and many Asian companies. The technical product group of the company has three operating divisions.
Semicon Tools, Inc., "STI" (USA) distributes and manufactures semiconductor fabrication supplies for the semiconductor and electronics industries. (http://www.stidiamond.com/)
DTI Technology Sdn.Bhd., "DTI" (Malaysia) the manufacturing arm of STI, primarily is involved in diamond tool manufacturing for the semiconductor, machine tool and jewelry industries along with fabrication ceramic and graphite slider plates for the hard disk drive industry.
East Coast Sales Co., "ECS" (USA) manufactures and distributes technical ceramics for the aerospace/defense and commercial aircraft industries, along with disposable clean room supplies for use in semiconductor, electronic manufacturing plants and laboratories. (http://www.ecsceramics.com/)
The consumer product group has one operating division:
Fuji Fabrication Sdn.Bhd., "FUJI" (Malaysia) manufacturing cellular phone batteries and other rechargeable batteries with a wide array of applications within the computer telecommunication and home electronics industries. (http://www.setoholding.com/fuji/index.html)
Contracts
SETO currently holds contracts with Seagate Technology, Inc. (NYSE: SEG), the world's leading independent maker of storage drives for computers. The Seagate contract is valued at approximately $500,000 per year.
SETO has received confirmation from Read Rite Corp. of Thailand, (NASDAQ: RDRT), that the first of two products submitted for evaluation has passed testing and is approved for production. The second evaluation of a similar product is expected to be completed during April/ May 1999. Read Rite Corp. is the world's No. 1 independent maker of magnetic recording heads used in hard disk drives. Confirmation of orders from Read Rite is expected in second quarter of 1999. (see PR: biz.yahoo.com
Work in progress:
Fuji Fabrication has over three years of battery manufacturing experience and has already passed evaluation and test requirements to manufacture for such major companies as Ericsson, Nokia, Panasonic, NEC, OKI, and others. As a leading manufacturer of a full range of battery packs for cellular phone batteries, notebook computers, camcorders and OEM solutions; Fuji offers superior quality products and services in line with increasing demands in the global market. In addition, Fuji has selected the world's leading cell manufacturers such as Sanyo Energy, Panasonic, Moli Energy, Sony, GP Batteries, Toshiba, Ultralife and PolyStor to use in FIJI batteries.
We feel that Fuji will be a major player in the after-market cell phone battery market, as well as similar markets for notebook computers, laptop computers and camcorders. FIJI currently produces between 15k-20k batteries per month and is expected to increase sale by over 400% in the next 12 months. In addition, SETO is adding e-commerce to the FIJI web site, and anticipates accepting individual and corporate orders for cell phone batteries at a MAJOR discount before the end of April, 1999.
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