Innotek

Innotek: 3Q14 net loss was at $2.8m versus a net profit of $4.7m from the previous year, taking 9M14 net loss to $10.5m (9M13 net profit at $3.2m). Revenue fell 12.9% to $58.1m, due mainly to revenue decline from all three of its business segments, namely the precision sub-assembly point, tooling segment and the precision component segment. Gross margin inched down to 10.0% from 10.4%. The poor performance of the precision component segment was due to the fall in demand for TV back panels from major Japanese customers and the early end-of-life for current automotive programmes. Bottom-line was further weighed by a 82.5% drop in other income to $1.6m, largely due to disposal gains on PPE recognised in the previous year. Going forward, Innotek guides that as it continues to chart its growth for turnaround and enhance shareholder value, the Chinese TV and automotive markets offer many opportunities that the group is working to leverage on. The Taiwanese market also currently contributes to 8.0% of the total group’s revenue, a 3.0% rise from 1Q14. This is expected to grow further in 4Q14 and throughout 2015. With the prospect of accelerated growth, InnoTek has recently established a Taiwan subsidiary to engage ODM TV manufacturers. In the Automotive sector, InnoTek has secured tooling and production commitments for their Wuhan facility, with mass production expected to start in late FY15. InnoTek has a current net cash position of $23.1m, representing ($0.103 per share). At the current price of $0.28, the group trades at just 0.43x P/B.