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9 Quick Things Investors Should Know About Dutech Holdings Ltd’s Latest Earnings

In early March, Dutech Holdings Ltd (SGX: CZ4) released its 2017 fourth quarter and full year earnings update. As a quick introduction, Dutech is in the business of making safes, with a focus on ATM and banking safes. It is the largest manufacturer of high security products in Asia.

Here are nine things investors should know about Dutech’s latest results:

1. Revenue for the reporting quarter improved by 4.4% year-on-year to RMB 463.8 million.

2. But, operating profit for the quarter declined by 83.8% year-on-year to RMB 3.1 million.

3. Consequently, net profit fell by 59.8% to RMB 8.4 million, compared to a year ago.

4. Similarly, earnings per share (EPS) was down by 58.8% to RMB 0.0235.

5. The company’s gross margin for 2017’s fourth quarter was 21.0%, down from 24.1% in 2016’s fourth quarter, mainly due to a change in the sales mix.

6. In the fourth quarter of 2017, Dutech generated operating cash flow of RMB 52.0 million, up from RMB 8.0 million a year ago. The increase in operating cash flow was mainly due to better working capital management in the reporting quarter.

7. As of 31 December 2017, Dutech’s debt stood at RMB 216.6 million while its cash and bank balances was RMB 298.2 million, giving it a high net cash position of RMB 81.6 million.

8. In the reporting quarter, Dutech’s High Security segment saw its revenue decrease by 9.8% year-on-year to RMB 230.8 million. Meanwhile, there was a 23.6% increase in revenue to RMB 233.0 million at the Business Solution segment.

9. In its earnings update, Dutech provided the following statement on its outlook:

“The management expects trading condition to remain challenging. Rising raw materials prices, ATM sale market shrinking will serve to affect group performance. On the other side, our gaming machine sales are strong in 2018. As a whole, management expects the Group to remain profitable in Q1 2018.

The Group will continue its efforts in expanding new products lines to reduce the risk of shrinkage of ATM markets. Meanwhile we will also continue to focus on innovation and the development of new generation of Ticketing and Vending Machines.

After acquiring Krauth, Metric UK and the purchase of certain assets of Metric AG, we will focus on the integration synergies in joint development of self-service terminals.”

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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 Lawrence Nga doesn’t own shares in any companies mentioned.