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Technology Stocks : Nam Tai Elec. (NTAI) -- Ignore unavailable to you. Want to Upgrade?

To: blankmind who wrote (1465)	8/8/1998 12:17:00 AM
From: mod	Read Replies (2) \| Respond to of 1696

National Securities Corporation (in Chicago) issued the following research on NTAIF today. I have had no position in NTAIF for quite a while, and don't necessarily agree with the report. Also, I have never heard of this firm (and I've heard of most everybody). Dennis -------------------------------------------------------- DAILY NOTES August 7, 1998 Good morning Nam Tai Electronics (NTAIF- 11) Strong Buy Steven Kornfeld, CFA Nam Tai reports second quarter operating earnings which easily exceed our revised estimates. NetE PS in line after special one time charges. Stock is trading at bargain levels. Nam Tai Electronics reported solid second quarter results last night after the close in the face of turmoil in both Asia and in the contract manufacturing sector. For the quarter, the Company reported operating earnings of $0.37 per share which significantly exceeded our estimate of $0.24 per share. Net EPS of $0.27 came in slightly below our $0.29 target due to an unanticipated one-time custom assessment of $1.4 million or $0.14 per share. Sales decreased 23.7% to $30.9 million from a year ago when Nam Tai recorded record revenues of $40.4 million. Revenues exceeded our target of $28.3 million. Nam Tai reported a gross margin of 24.2%, which exceeded their baseline goal of at least 20% and our quarterly forecast of 23%. The higher than forecasted revenues and gross margin combined with lower R&D expense led to NTAIF's operating income of $3.9 million or 13% of sales. This level is in line with the Company's results in the prior three quarters. In addition to the one-time custom charge, Nam Tai recognized $840,000 for a currency option the Company purchased to protect its assets in case of a devaluation of the local currency. In terms of product sales, calculator sales accounted for 70% of revenues (versus 57% a year ago), personal organizers and linguistic products accounted for 12% (25%). In terms of sales by region, North America accounted for 53% (versus 60% a year ago), Japan 20% (18%), Europe 22% (13%) and others 5% (9%). As it previously announced last month, NTAIF expects 1998 sales to be down by 15-25% due to both a slowdown in orders and in unit price reductions. Nevertheless, Nam Tai continues to deliver results that exceed expectations. Its shares are trading at bargain levels. It is trading at 84% of tangible book value, it has no long term debt and cash of $7.34 per share. It has about 900,000 shares left to repurchase, as part of its two million share repurchase program. We plan to participate on the conference call later this morning. Price Target: $27-29.