Advertisements

Turned around in FY20

■ Broadway Industrial Group Limited (BIGL) manufactures precision-machined components for the Hard Disk Drive (HDD) industry.
■ The company turned around from a loss of S$21.4m in FY19 to a net profit S$14.1m in FY12/20. 1H21 net profit was S$7.8m.
■ BIGL trades at a historical FY20 P/E of 7.3x, P/BV of 1.38x. In 1H21, BIGL declared a DPS of 0.5 Scts.

Advertisements

HDD component supplier

BIGL manufactures precision-machined components for the HDD industry. Listed on the Mainboard of the Singapore Exchange Securities Trading Limited since 1994, BIGL manufactures actuator arms, assemblies and other related parts for the HDD industry. Headquartered in Singapore, BIGL has four manufacturing facilities in China and Thailand and employed about 3,500 people at end-Dec 2020.

Advertisements

Turned around in FY20

BIGL turned around in FY20 with a net profit of S$14.1m versus a loss of S$21.4m in FY19. According to management, the turnaround was due to a) 30.7% yoy revenue growth to S$400.7m driven by higher average selling prices from product mix shift towards higher value enterprise and nearline products. The volume of enterprise and nearline products grew by 33% yoy to c.40% of the total volume sold by the group in FY20, and b) continued cost reduction, productivity and efficiency improvements made in the HDD manufacturing operations. In 1H21, BIGL reported a net profit of S$7.8m.

Advertisements

BAB: diversification effort

In 2020, BIGL entered into an equity purchase agreement to acquire a 55% equity stake in Beijing Ant Brothers Technology Co Ltd (BAB, Unlisted). BAB develops light weight, low power consumption and high-efficiency cleaning robots for large glass facades on building exteriors. According to BIGL, BAB will capitalise on BIGL’s manufacturing competencies to enhance its robot design and efficiencies for the cleaning service industry. Its robots are designed for use in office and commercial building facades, other architectural glass curtain walls and solar panels. According to BIGL, BAB will apply big data technology in robot service processes and utilise artificial intelligence to optimise the potential of its cleaning robots.

Advertisements

Historical valuation

BIGL trades at a historical FY20 P/E of 7.3x and P/BV of 1.38x. The company did not declare any dividends in the past four years. At end-Dec 2020, BIGL was in a net cash position. In 1H21, BIGL declared a DPS of 0.5 Scts.

Advertisements