John & Count,
The actions of the HKMA in the Hang Seng really have nothing to do with Deswell. In some ways the 'crisis' of HK/China can be of benefit to them. Property prices are down, but Deswell owns no property that I can determine, preferring to lease. Higher unemployment improves labor situation. Pressures on the economy make the government add incentives to boost exports and lower taxes. Higher interest rates means Deswell would get higher interest income on deposits in $HK, but this wouldn't be major as I believe they keep most of their funds in $US and would get equivalent to US rates.
The 'crisis' is effecting companeis with debt. It's the companeis with cash that should eb benefiting.
Dividend. I see no reason for them to cut dividend this year. It should be at least $1.00. Depending on how the second half goes as to whether they issue another 'special'.
Even with everything that's happening, I think Deswell might come in with 15% growth this year and above that next year. The US consumer market is weakening, but it's still strong. It's amazing that most people in the US don't realize what's happening in the world. Sentiment in Europe is declining fast with the Russian situation, but there's still a strong market there. And don't forget the potential in China. They are having problems, but the consumer market there is still growing.
However, the whole world economy could tank and there's no investment but bonds safe.
When I try to determine how Deswell will do, I look at the customers. Four of the primary five are growing. I would like to see Deswell add one more major this year. That would indicate some real strength going forward.
If we have the same weakness this morning that we closed with yesterday, I'll be adding. I'm not recommending others do this, but I feel that strongly about Deswell. And - above growth, there's 9.5-13% potential return from dividends at this price.
FWIW,
Ron |
