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AMO - AMBERTECH LIMITED


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Result in as forecast. Wouldn't like to see any more inventory creep in 2h10 without a jump in revenue. Dividend well up. Very cheap on most metrics, but the outlook was pretty neutral. Was hoping that HGL would have managed to quit their remaining holding by now, but must still have over 1m shares left to sell, so will have to see if the divi is attractive enough to clear the overhang.
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Just another thought on the inventory - looking back over the previous few years, it looks as though they tend to have higher inventory at end of first half, so perhaps a reflection of stock held going into the post Christmas sales.

 

Was also surprised the DRP was not activated, despite low cashflow. Can hardly see them borrowing to fund it (their existing facility is limited to $5.2m according to last annual report), so am hopeful they might be funding out of post-Christmas cashflow from sell-down of inventory.

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pretty damn impressive ,i reckon, Liz!

 

the share price is 50c - and will be for a while yet I guess!..

 

Yet eps is 6.6;

 

ff div t 3.5c;

 

nta at 60c

 

quick ratio at 2.5

 

no debt and $2.8m cash;

 

at last it's cash flow positive ( but only $230,000 comapred with $2m NPAT)

 

it has had a good 4 years and a OK horror year last year:

eps for last 5 years = 5c then 8c then 11c then 6c ( for horror year) and 7c so far this year!

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Thanks Anne - it is interesting to look at the eps figures like that. (I often think I need to add something into my spreadsheets that retains the historic info).

 

Despite the lack of forecast, it looks to me as though it should be able to at least match first half in the current period - I thought there might have been a seasonal effect with better first half, but looking through the pre-GFC era, they actually did quite a bit better in the second half in the 2006/2007 years. There is no sign of one-offs in the first half - revenue is pretty constant but margins up - I'd say probably partly due to AUD strength and partly due to cost control. Would expect these factors to remain in place for most of the second half.

 

On that basis, and assuming a buyer can get all they want at 50cps, it can be picked up at a forward P/E of 3.8, yield of 14% (plus franking), EV/EBIT of 2.9, with ROIC of 25%, Pr/NTA of 0.82 and net debt/equity of 9%. I honestly can't remember seeing anything this cheap on so many parameters - and the reason for being cheap seemingly just one large seller who has openly stated an intent unrelated to AMO's prospects.

 

Also a rare case of a Graham-Newman "Working Capital Bargain", where Current Assets net of Total Liabilities ($17.3m) is greater than Market Cap ($15.3m at 50cps). (This is only the third time I've picked up a stock that met this - both the other two times turned out very well).

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Thanks for your thoughts, Liz.

 

Here are some more thoughts I've had - both good and bad.

 

1. Inventory jumped $2m and cash flow profits were $2m below NPAT- so presumably they spent all their money on inventory. That could be good or bad, I guess: maybe they are stocking up on a big contract or they are expecting sales to boom - or it might mean they have a bit of stale stock there that they can't sell.

 

2. They didn't report much of a gain on the currency swap - which surprised me.I pegged them to really benefit from teh soaring aussie dollar.

 

3. their history says they're capable of throwing a shocking half after a good half - hope that doesn't happen this time.

 

4. not only did sales fall for the commercial side of the business but their profit margin on the commercial side of business fell to 3% or something terrible! They did say that they had a great year for the comsumer lifestule home theatre side of business and that the other side was bad. They have since announced a $9m contract with Vic Police - $5m of which will get filled in the 2010 calendar year - so hopefully that contract awards them a decent profit margin.

 

5. From memory this half's result had a mysterious other business income of $.6m compared with a loss of $.4m last year - their resutls didn't explain any further.

 

6. I tried to find out more about the home theatre industry - to see if there was any evidence it was a booming market - but I drew a blank. Ambertech says they deliberately avoid products that the big names like Sony and panasonic dominate in - like the TV screens themselves . AMO instead specialises in the "other" products.

 

It's hard to get a feel for whether AMO has built themselves a nice 'protective moat" a la Warren Buffett.

 

They have had the same management for about a decade so surely they know what to do by now!

 

7. It is impressive that their eps is trending up strongly each year - apart from last year's horror year. And it's interesting that they floated at a dollar and they were a dollar again in Jan 08 - but now they are 50c. They certainly can't stay at 50c if they have another great second half!

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  • 11 years later...

is this the same company as a decade ago? Probably yes and no!! Was on a decline for most of the last decade, but has turned around recently.

 

Ambertech Limited (AMO) is engaged in the import and distribution of high technology equipment to the professional broadcast, film, recording and sound reinforcement industries; the import and distribution of home theatre products to dealers; distribution and supply of custom installation components for home theatre and commercial installations to dealers and consumers, and the distribution of projection and display products with business and domestic applications.

 

Revenue up across the board, 38%, across all segments. At a PE of 4 and a yield of 10%

Revenue .. $80.1M

EBIT .... $6.4M

NPAT .... $5.1M

Final Dividend ... 1.6 cents

The strong result has enabled the Board to reward shareholders with a total dividend payout of 3.1c per share in relation to the year ended 30 June 2021 (final dividend 1.6c). This equates to a payout ratio of 47%, which is in the target range of 45%-55% of net profit after tax. Investors should take note that all accumulated tax losses of the business have now been used and the entity will be back to paying tax in relation to the 2021 financial year.

 

The major drivers of revenue growth were:

 Full year contribution of the brands acquired from the Hills AV business in December 2019;

 Successful supply of communication solutions to the defence industry;

 Sales to musical instrument retailers with strong on line offerings during the COVID19 pandemic; and

 Success of the introduction of Philips branded projectors in the consumer electronics retail market.

 

 

The reported results for the business have significantly improved since the successful acquisition of the Hills AV division in December 2019. This acquisition was a step in a strategic plan to become leaders in each of the markets in which we operate.

 

Outlook for the business

 

Whilst the return of the COVID19 pandemic in delta form has created some uncertainty and variability of trading results in the short term, the general outlook for the 2022 financial year remains positive. Ambertech is well placed to continue to grow by enhancing results from our existing agencies, and through further exploring acquisition opportunities to cement our place as market leaders in each of our chosen markets.

 

The diversity of our business, leadership positions in certain segments and financial resources are strengths in the current climate. They position us to capitalise on opportunities that may arise.

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  • 1 month later...

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