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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: sjemmeri who wrote (31809)	8/20/2008 11:22:21 AM
From: Paul Senior	Read Replies (1) \| Respond to of 78768

sjemmeri. The stocks have moved away from me, for now.

To: sjemmeri who wrote (31809)	8/22/2008 11:35:53 AM
From: Paul Senior	Read Replies (2) \| Respond to of 78768

Sjemmeri, here's one that seems to me to a good value and a good bet. Jumping up my position substantially today, but not so much that I'm going for a significant portfolio position: I'm too unsure of what I've got with this stock and too concerned I've missed considering significant stuff that other people ("the market") know, that I don't. Deswell has been mentioned here for many years. A favorite discussion topic in 1998. At that time, several respected people here were buying it. Message 6065110 I saw the company as basically a injection molding shop - worth a single digit multiple at most, and the company not having any proprietary assets. The stock performed well subsequently though - despite my scoffings. Ten years later the situation is different. DSWL. The stock at $4.80+- is at about an 8 year low. It sells at a p/bk of .63. Stated bk has increased every year since '99. There's no ltd (per Yahoo). The company has about $1.22/sh in cash + cash equivalents. Current p/e under 8; p/sales is .5. Average p/sales ratio for each year since '99 has been higher than .5. With the current dividend rate of .48/sh, that's a 10% annualized dividend yield on current stock price. Yearly average roe and profit margins have come down from numbers in '99-'03. ROE is now 8% ---not so good. Some of this maybe can be explained in that DSWL has diversified into assembling electronic devices - a business where competition abounds and margins are low. Also, there are several other factors: From the July quarterly report, "Mr. Franki Tse, chief executive officer, commented, “We are encouraged by the sales increase we reported in the fourth quarter driven by strong sales in our plastics division. That being said, our manufacturing costs are still being impacted by crude oil price increases, RMB appreciation, resin cost increases, labor/electricity rate increases, as well as the American economic situation and inflation in China.” biz.yahoo.com =================== To me, DSWL seems like a well-capitalized, consistently profitable company, selling at an attractive price point. Not a great business at an attractive price --- more the okay/mediocre business at a cheap price. It's in a very competitive sector, but for which I expect DSWL to get its share of customers. Worth it to me have a position and to hold on to see if stock will improve.