Plastoform

Plastoform: 2Q12 results, post mgt briefing. Still loss making, but possible turnaround story in 2H12. Revenue at HK$70.2m, +55% yoy, driven by a doubling of sales from its ODM projects. However, revenue is down 27% qoq, due to seasonality. Net loss halved yoy to HK$8.4m, but widened from the HK$1.3m loss in 1Q12. The losses are inline with the revenue trends, given the high fixed cost nature of the business. Recall, the co is on the SGX Watchlist, and has been granted extension until Mar ’13 to meet the requirements for removal from the Watchlist or face delisting. The co has managed to keep above the $40m min mkt cap criteria since mid May ’12, but will have to show a pretax profit for FY12. For 1H12, Plastoform recorded a net loss of HK$9.7m. Nevertheless, mgt remains confident that the co will be profitable in FY12. Cites its “substantial” orderbook at hand which provides earnings visibility, and potential new product launches in 2H12 to boost sales. Mgt highlights 2Q12 inventory levels rose from HK$54.7m to HK$73.7m sequentially, vs 2Q11’s sequential decline in inventory. Says, the inventory build up (mostly finished products) is meant to fulfill 2H12 deliveries. Also mthly sales from Jan – Jun 2012 have been tracking higher each month. Plastoform’s second half of the year is traditionally the stronger half. If Plastoform can at least maintain its 2H11 performance (HK$13.5m net profit), mgt indeed has reason to believe that 2H12 net profit would be able to more than offset the 1H12 loss. Key catalysts for Plastoform to re-rate are therefore a potential earnings turnaround in 2H12, and potential removal from the SGX Watchlist in 1Q13. Plastoform is a manufacturer of audio products, specializing in Blutooth and acoustics technologies. It is the ODM for consumer electronics brands such as Logitech, Belkin, Monster Cable, etc and OEM for customers such as Sony, HP, Dell, etc. Its latest key product, wireless portable speakers, is expected to be the growth driver for its ODM business. http://www.trustedreviews.com/logitech-mini-boombox_Portable-Audio_review_performance-and-verdict_Page-2