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DUFU TECHNOLOGY CORP BHD

DUFU Stock Overview

Profile

Dufu Technology Corp. Berhad is a Malaysia-based investment holding company. The Company is engaged in the manufacture of industrial products and trading of computer disk-drive-related components. It specializes in the design, development and manufacturing of precision machining parts and components for hard disk drive (HDD), industry safety and sensor, telecommunications, consumer electronics, medical, automotive and office equipment. The Company also provides engineering and turnkey solutions, which is ranging from tool making to finished part supplies to meet its customers specific needs. It exports its products to approximately 10 countries across the world covering Asia Pacific, Europe, Oceania and North American region. The Company owns and operates over three manufacturing sites.

Sectors: Industrial Products, Technology, Manufacturing, Industrial Materials, Components & Equipment, Industrial Products & Services, Precision Machining, Small Cap

Stock Code: 7233

Website: http://www.dufutechnology.com/

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KIM DESK

What Kim's say about DUFU?

Dufu Technology Corp Bhd – The company is one of the world’s leading manufacturers of hard-disk drive (HDD) disk spacers. Dufu’s growth is underpinned by enterprise HDD demand especially from cloud and data centres.

01. Dufu Technology Berhad's Earnings Per Share Are Growing.

  • If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. That makes EPS growth an attractive quality for any company. Over the last three years, Dufu Technology Berhad has grown EPS by 16% per year. That growth rate is fairly good, assuming the company can keep it up.
  • One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. The good news is that Dufu Technology Berhad is growing revenues, and EBIT margins improved by 6.4 percentage points to 51%, over the last year. That's great to see, on both counts.

 

02. Investor sentiment improved over the past week

  • After last week's 20% share price gain to RM2.62, the stock trades at a trailing P/E ratio of 18.8x.
  • Average trailing P/E is 16x in the Machinery industry in Malaysia.
  • Total returns to shareholders of 236% over the past three years.

 

03. Full year 2021 earnings: Revenues and EPS in line with analyst expectations

Full year 2021 results:

  • EPS: RM0.14 (up from RM0.10 in FY 2020).
  • Revenue: RM352.7m (up 15% from FY 2020).
  • Net income: RM73.7m (up 42% from FY 2020).
  • Profit margin: 21% (up from 17% in FY 2020). 
  • The increase in margin was driven by higher revenue.
  • Revenue was in line with analyst estimates.
  • Over the last 3 years on average, earnings per share has increased by 12% per year but the company’s share price has increased by 50% per year, which means it is tracking significantly ahead of earnings growth.

 

04. Dufu Technology Corp. Berhad Proposes Single Tier Final Dividend of 5 Sen Per Share for the Year Ended December 31, 2021

  • Dufu Technology Corp. Berhad proposed a Single Tier Final Dividend of 5 Sen per share for the year ended December 31, 2021 to be approved by the shareholders at the forthcoming 20th Annual General Meeting of the Company. However, the entitlement date and date of payment of the dividend have yet to be finalized at the moment.

 

What Kim's say about Technology Sector?

  • Tech stocks the world over have been absolutely hammered in 2022 so far, but it doesn’t spell danger for the sector overall. If you’re a keen investor in all things technology, you have reason to be a little concerned about the way the sector has started 2022. Everywhere you look, tech stocks are being hammered. Some of the world’s biggest names have not been immune: Netflix is down 33% this year, Tesla is down 21% and Amazon is down 16%.

Why is this happening?

  • The tech market tumbles are due to wider concerns about interest rates and inflation.
  • To be quite blunt, the performance in tech stocks this year has been pretty sad, unfortunately, It is being driven by fear around interest rates and inflation, and that impacts growth stocks the most.
  • Tech companies can experience faster growth and higher cash flow, and their value is in the future.
  • It has been a big shock to the system after so many years of low-interest rates, and with COVID we saw huge pools of money being thrown into economies to stimulate growth, and as that happens we start to ratchet up interest rates.

But no need to panic and lose hope

  • Despite the concerning falls being seen across the tech sector, there’s no need to panic about it being a long-term trend.
  • The quality of earnings and fundamentals hasn’t changed for many tech companies, despite the share price falls.
  • The tech sector has an impressive reputation for delivering returns on equity and strong balance sheets, two things that you want to look out for.

Kim's Target Price

  • DUFU (7233)
    Entry Price : RM2.67
    Stop Loss : RRM2.41
    Resistance : RM2.73/ RM2.81
    IMD TP1 : RM2.80
    IMD TP2 : RM3.50
    KIM’S TP : RM4.50

Past Earnings Growth 

  • Earnings Trend: DUFU’s earnings have grown by 18.4% per year over the past 5 years.
  • Accelerating Growth: DUFU’s earnings growth over the past year (42.2%) exceeds its 5-year average (18.4% per year).

Financial Health

  • Short Term Liabilities: DUFU’s short term assets (MYR275.8M) exceed its short term liabilities (MYR63.9M).
  • Long Term Liabilities: DUFU’s short term assets (MYR275.8M) exceed its long term liabilities (MYR10.1M).
  • Debt Level: DUFU has more cash than its total debt.
  • Reducing Debt: DUFU’s debt to equity ratio has reduced from 6.6% to 5.5% over the past 5 years.
  • Debt Coverage: DUFU’s debt is well covered by operating cash flow (343.7%).
  • Interest Coverage: DUFU’s interest payments on its debt are well covered by EBIT (280.3x coverage).

Dividend

  • Current Dividend Yield : 2.41%
  • DUFU’s dividend (2.41%) is higher than the bottom 25% of dividend payers in the MY market (1.89%).

Top shareholdings

 
Shareholder Value (M)
Perfect Full Yen Sdn Bhd 150.48
Perfect Commerce Sdn Bhd 137.12
Lee, Hui-Ta @ Li Hui Ta 132.52
Wong Ser Yian 71.97
Wu, Mao-Yuan 49.42
Tokio Marine Life Insurance Malaysia Bhd 40.51
Eastspring Investments Small-Cap Fund 30.49
Wang, Kuei-Hua 27.01
Updated on February 26, 2021

DUFU News

DISCLAIMERS

The research, information and financial opinions expressed in this article are purely for information and educational purpose only. We do not make any recommendation for the intention of trading purposes nor is it an advice to trade. Although best efforts are made to ensure that all information is accurate and up to date, occasionally errors and misprints may occur which are unintentional. It would help if you did not rely upon the material and information. We will not be liable for any false, inaccurate, incomplete information and losses or damages suffered from your action. It would be best if you did your own research to make your personal investment decisions wisely or consult your investment advisor.

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