*1)* *YBS International Bhd* is a Malaysia-based investment holding company involved in the provision of management services
*2)* It operates in 3 segments:- a) Precision engineering b) Precision plastic injection moulding c) Precision machining and stamping
*3)* The precision engineering segment is engaged in designing and manufacturing precision molds, tools and dies, and jigs and fixtures
*4)* The precision plastic injection moulding segment is engaged in the precision engineering plastic injection molding and sub-assembly
*5)* The precision machining and stamping segment is engaged in manufacturing and selling of precision machining and stamping components for the telecommunication, industrial sensors, switches, electronic equipment and other industries
*6)* The smallish low profile company, however, could be in limelight soon, thanks to the pandemic driven:- a) Supply chain distortion in the aerospace industry b) Boom in the RF/communication chip demand
*7)* Expect consistent sequential earnings growth and contract flows to be near term price catalyst for *YBS*
*8)* Firstly, the aerospace contribution (which is of the key industry they serving) is expected to rise as the turmoil in the sector has literally wiped out much of the smaller precision parts (like light-weight power and data connector) suppliers in the US. Compounding to this supply imbalance is that major parts supplier like UACE (JHM's main aerospace customer) is holding back its expansion plan due to restructuring of its parent company. With its US aerospace customers turning to YBS to fill the above void, can expect contribution from the precision engineering division to rise from current 37% (in 9MFY21)
*9)* Secondly (and perhaps the key catalyst), *YBS* is on the verge of securing a contract from a customer serving the RI/communication industry. Interestingly, this customer count one of the major iPhone/Android phone RF(FBAR) supplier (Q or B) as its major client. Although contract details remain unknown at this juncture, *YBS* profile as a precision part supplier will be lifted significantly, thereby opening doors of opportunity to supplying other critical parts of the mobile phone going forward
*10)* *YBS* is the next turnaround story after Mieco and Rex. Despite being in the red (net loss of Rm 0.3 mio) over the trailing 12 mio, stronger earnings contribution from the aerospace as well as the new contract win (from customer serving Q/B) will help flip the company back into the black with sequential earnings growth. By pegging *YBS* to 18x PER (vs 23x for JHM), a conservative profit assumption of RM3.5 mio in FY03/22 (vs RM2.8 mio in FY03/19) offers good upside for *YBS*
*11)* If one is familiar with JHM, UWC and Dufu, *YBS* is basically a mini of those players
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
bobobaik
13 posts
Posted by bobobaik > 2020-09-03 15:04 | Report Abuse
Game Over?