Global Testing

Global Testing: OSK DMG initiates coverage with Buy call and TP $0.165. The house notes that an award-winning testing veteran, Global Testing is a proxy to TSMC. With: i) a boost from TSMC amid a semiconductor recovery in 2014, ii) a potential margin increase, iii) robust cash flow and SGD0.05/share net cash, this overlooked gem could see a massive turnaround with its FY14 profit surging by about 250%. Global Testing Corporation Limited (Global Testing)’s 1QFY14 results indicate a potential massive turnaround ahead, with a USD0.1m gain in 1QFY14 from a USD0.8m loss in 1QFY13. Going forward, we expect the company’s margins to increase and FY14 profit to surge substantially by about 250% as depreciation expenses fall drastically. Global Testing had a solid net cash position of US$28.9m or $0.05/share, approximately half of its share price. With robust free cash flow even in years of losses, expect the company to reach a net cash of $0.083/share in FY15. Also, from 2008 to 2014 YTD, Global Testing had bought back 31.8% and cancelled 31.5% of its total shares outstanding in 2008.