My thoughts:
The Q came in more or less as I had been projecting, but I was hoping for an upside surprise. Considering economic conditions, this is a very good Q report.
Positives I see are sustained margins and cash generated was so large. In the last six months they have added over $10M to cash liquidity after paying out the dividend and spending over $2M on capital expenditures. Dividends are secure & up.
Negatives-
Kwanasia continues to be below last year, but last year Kwanasia had huge growth. Part of the lower sales would be due to component costs, but it appears that the growth of Behringer and InterTel has slowed.
Kwanta had attained profitability the 4Q and continued this in the 1Q, but has now slipped back into small losses.
Mita is a customer of Jetcrown as are VTech, Namtai, and of course, Kwanasia. The Mita sales were to drop by 50% in September. Increased sales to other custemers (mainly VTech) offset the lost sales to Mita and Jetcrown was able to grow sales by 3% in spite of lower pricing due to raw material costs. They indicate lower sales to Mita now thru the next Q and possibly longer. The lost sales were in one month this Q, now we're looking at 3 months. Not likely that VTech and other customers will make up for these lost sales. This would put Jetcrown at lower sales and lower earnings, earnings that effect EPS by 100%.
S,G,&A costs are down substantially. I have to wonder about this. where did the reductions come from? Can these lower numbers continue thru the end of the year?
A positive report for the Q, but a negative for the coming Qs. Unless they bring some new customers in or Mita orders pick up sooner than expected, I see weakening the 3Q and possibly the 4Q. It looks like they will have a hard time showing growth this year and may be below last year.
I sold the recent shares I bought on margin when I saw the report.
FWIW,
Ron
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