SAC Capital analysts June Yap and Matthias Chan are encouraged by the 1QFY2024 ended March turnaround of precision plastics manufacturer, Fu Yu Corporation F13 , after the company reported a net profit of $5,200 compared to a net loss of $2.4 million a year ago.
For now, Yap and Chan have kept the stock unrated in their May 20 note.
“Previously a dominant force, the company had experienced stagnation in capabilities and manpower over the last 10 to 15 years,” writes Yap and Chan.
They add: “However, with a new team on board and a newly-opened smart factory, the group has revitalised its capabilities, enabling entry into new markets such as MedTech and internet-of-things (IoT) consumer electronics.”
Fu Yu Corp’s improved figures have come about from its supply chain arm achieving a $400,000 net profit in the 1QFY2024 and its significantly y-o-y reduced loss from $2.4 million to $400,000 in its manufacturing business.
The analysts point to the company’s strength of establishing a new products introduction (NPI) team and its four-level smart factory in Tuas as “significant advancements”, with the latter boasting reduced yield loss, minimised human error, and enhanced precision manufacturing levels.
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Additionally, Fu Yu Corp has been appointed as the exclusive contract manufacturer for Singapore's startup, myFirst, facilitating its expansion into North America.
two Furthermore, the company secured two new projects with international partners, one for producing microfluidic chips for medical diagnostic devices and another for manufacturing high-precision tools for drug delivery devices, while a memorandum of understanding (MoU) was signed in the 1QFY2024 for a Singapore-based medical device manufacturer.
Yap and Chan note that group CEO, David Seow, has expressed optimism about the company’s future growth trajectory, emphasising the importance of expanding the project pipeline and executing strategic initiatives.
As at 11.14 am, shares in Fu Yu Corporation are trading flat at 13.1 cents.
