Some time with nothing to do, so will make commentary and projections on Deswell operations over the coming months.
IMO:
We should pay more attention to FFO than EPS. In any growth company, using standard accounting procedures, this is a better indication of value. We also need to watch G&S expenses as a percentage of revs. As David pointed out, they took a big jump and should at least flatten.
97DecQ should have significant improvement over 97SepQ. There's no way to determine the extent of gain, but we can assume they are operating near capacity and this includes the machines added last Q and growth in assembly. Kwanasia will likely show a major increase in revs and some increase for Jetcrown and Kwanta. Bottom line to be higher, but a slight decrease in net margin percentage. As Paul has mentioned, reported increase in EPS will be lessened by the change to full dilution reporting. Look at the actual numbers and any change in dilution from stock options.
98MarQ will likely be flat with 97DecQ and the weakest growth. They will be running near full capacity this Q and can make little improvement. However, there should be a nice EPS gain. In the 98MarQ they will have the newly leased facilities ready and the Toshiba machines installed but not operational in time to influence revs and earnings. This expansion may have some negative impact on bottom line.
98JunQ should have a big gain. Everything will be fully operational. Jetcrown will have major gains from added machines, Kwanasia and Kwanta continue to operate near capacity. Kwanasia may have an increase as they get a higher supply from Jetcrown. Due to the high margins and 100% ownership of Jetcrown, bottom line, FFO, and EPS should show big improvement.
They apparently are able to get far more business if they can increase production. Look for more announcements of facility and machine expansion. If it's compatible to the current operation, they may acquire a majority holding in another company, perhaps another electronic company merged into Kwanasia or soemthing similar. Any plastics acquisition would likely be a full buy out.
We can expext them to continue using their monies wisely and show a high rate of growth thru '98. I look for at least a $3.00 EPS in calendar '98 on >$100M revs.
For what it's worth,
Ron |
