Highlights from Elec & Eltek’s First Quarter Results

With a corporate history of more than 41 years, Elec & Eltek International Company (SGX: E16) is today one of the world’s leading designers, manufacturers, and distributors of double-sided, multi-layered, and high-density printed circuit boards.

The company has 5 production facilities located in Hong Kong, Kaiping, Guangzhou, Yangzhou and Thailand with representative offices across Asia, America and Europe.

Financial summary

Elec & Eltek had reported its first quarter results on Tuesday after the market had closed. During the quarter, it achieved revenue of US$115.71 million, basically unchanged from the revenue of US$115.76 million in the corresponding quarter last year. However, net profits slumped 70.3% from US$4.036 million to US$1.2 million mainly due to a big decrease in gross profit margins from 11.5% to 7.5%.

Moving on to its financial position, the group’s net gearing ratio is at an estimated 15.2% as of 31 March 2014. Lastly, a point to take note is with regards to the company’s net working capital cycle – inventories are being held up longer, while trade receivables and payables have increased slightly.

Growth Plans & Valuation

The earnings release by the company contained a few pointers that highlighted some of its future prospects:

1. After the Chinese New Year holiday season, business momentum is improving as customers start to gear up their production activities for the second quarter. This has also led to higher plant utilization for Elec & Eltek since March.

2. The company would continue to allocate resources to expand capacity and upgrade production capabilities to serve customers in the telecommunication and automotive segments as those two segments have continued to show growth.

Based on the Elec & Eltek International’s share price of US$1.615 as of 29 April, it is trading at 28 times trailing earnings and sports a dividend yield of 8.54%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.