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SETO Holdings looks very attractive
Date written: Oct 27, 2000
By: Lou Ambio
SETO Holding, Inc. (OTC BB: SETO) operates as a broad based technical manufacturer in the technical products and consumer products industries. The company’s technical products division produces diamond tools, wafer fab supplies, and technical ceramics among other products and their consumer products division produces cellular phone batteries, rechargeable batteries for other uses, consumer electronics, and telecommunication devices.
It is also important to note that the company has an established presence in Malaysia with has complete manufacturing and distribution facilities. With their presence in Malaysia SETO has a low cost source of supply and the capacity to up to 30,000 dicing blades per month, not to mention the ability to manufacture all models of cellular phone batteries.
SETO’s technical group is comprised of three operating divisions, Semicon Tools, DTI Technology SDN.BHD, and East Coast Sales. Semicon Tools distributes and manufactures semiconductor fabrication supplies for the semiconductor and electronics industries and DTI Technology is the manufacturing arm of Semicon. This division does diamond tool manufacturing for the semiconductor, machine tool and jewelry industries and also produces ceramic and graphite slider plates for the hard disk drive industry. Despite the misleading name the East Cost Sales division manufactures and distributes technical ceramics for the aerospace/defense and commercial aircraft industries. They also produce clean room supplies for use in semiconductor plants, electronic manufacturing plants, and laboratories. Of course, what good is the production of all these interesting products if there is no one to purchase them? That is why it is important to note they sell their products to numerous Fortune 500 Semiconductor clients including IBM, National Semiconductor, Motorola, General Motors, and other Asian companies.
SETO’s consumer product group also has three operating divisions, Fuji Fabrication Sdn.Bhd, Hong Kong Batteries Industries Limited, and FIMAS SDN BHD. Fuji manufactures cellular phone batteries and other rechargeable batteries for use in computer telecommunication and home electronics industries, while Hong Kong makes rechargeable batteries for OEM customers in video, cellular, telephone, and other industries. Finally, Fimas produces PCB Assemblies, Multimedia products, CD Rom Drives, Super VCD and DVD players, and Plastic Injection Moldings.
On September 8, SETO Holdings, Inc. announced that it has entered into an agreement with Lucent Microelectronics Group, the leader in communications semiconductors. The agreement allows Lucent and SETO to share proprietary marketing, technical or business information including products and/or software relating to all information regarding Lucent Technologies Microelectronics Group's V.90 analog data/fax modem technology and, ADSL Wildwire modem technology, schedules, and products. Not to mention information relating to Lucent Technologies channel marketing programs. Simply, this deal should definitely lead to the growth of SETO’s telecommunication product line.
SETO also appears to have a strong plan in place for future growth. In the future they pan to sell the “SETO” brand name for products such as ADSL modems, Internet Phones, Set Top Boxes, Multimedia Speakers, and CDRs. Furthermore, SETO has teamed up with players in the Telecommunication Industry and ASPs to sell SETO’s manufactured products and share content and ISP income.
Last quarter, SETO Holdings Inc. announced that revenue for six months ended July 31, 2000 was $13,089,849 as compared to $1,761,845 for the comparable period ended July 31, 1999, an increase of 642 %. Furthermore, income from operations for the six months ended July 31, 2000 was $512,182 as compared to $128,287 for the six months ending July 31, 1999, a 299 % increase and net income of $ 295,277 as compared to $ 89,413, a 230 % increase as compared to the six months ended July 31, 1999.
But as I said the shares have been slumping, and the company does not really know why. On October 19 the company released a statement specifically concerning this. Gene Pian the company’s president and CEO, commented, "SETO has never been is a stronger position then the present time, from the first days of our inception as a private company in 1983 and as a public company since 1987, 17 years in total. Our growth from $6+ million last year to over $30 million forecast for this year with $15+ million in assets, $7+ million net worth and only $4 million in debt, we think makes SETO a very strong company with a great future and huge potential for shareholders equity growth."
Finally, with 7.7million in net shareholder equity, 4 million is required for a NASDAQ Small Cap Listing, and a credit line from Merrill Lynch that was bumped up from $750,000 to $1 million on July 26, things appear to be going great for SETO, making it a bargain as it only maintains a market capitalization of $15.9 million.
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