23 November 2011

OPCOM HOLDINGS BHD (OPCOM, 0035) Q3 Quarter Report 2011: So Far So Good.

Personally, I quite like OPCOM business even using the special dividend I received from OPCOM to top up some more OPCOM shares to enjoy the grow of its future earning. Although this Q3 report is relatively less attractive compared to preceding year's corresponding quarter and preceding quarter, OPCOM still maintain its attractive areas (Zero borrowing, low CAPEX, Strong Cash flow, lots of Cash).

Let's take a look at what OPCOM comments from its Q3 report:
Review of Performance
The Group registered revenue of RM22.6 million and profit before tax of RM6.7 million in current quarter as compared to revenue and profit before tax of RM34.5 million and RM9.3 million respectively in the preceding year's corresponding quarter. The sales of the Group's products was affected by the festive season which resulted in lower revenue contribution in current quarter. However, profit before tax margin for the current quarter was higher as there was relatively more sales of higher margin products.
Variation of results against the immediate preceding quarter
The Group's revenue decreased to RM22.6 million in current quarter as compared to the immediate preceding quarter of RM33.1 million. The Group registered a profit before tax of RM6.7 million in the current quarter as compared to RM9.7 million in the immediate preceding quarter. There was a decrease in sales during the festive season which resulted in lower revenue contribution in current quarter. The profit before tax margin was consistent in current and immediate preceding quarter respectively.
With the 2-year extension of the existing RM359.6 million FTTH Supply Contract with Telekom Malaysia Berhad in hand, the Board is positive of the Group's performance for the remaining quarters of current financial year.
Seasonality of interim operations
The fiber optic cables market is observed to be seasonal in nature and dependent on the general economic and business environment. Given the Group's long experience in fiber optic cables market, the Group is well positioned to ameliorate any seasonal fluctuation of demand for its products.
Overall, OPCOM performance is considered good. Besides, it is worth to highlight that although the revenue of OPCOM keeps growing in these few years, its "Administrative expenses" decreases annually. This event is very attractive for me because generally "Administrative expenses" will be increased annually, especially when the profits of the company is increased. In addition, based on the historical dividend payout ratio, bonus and recent special dividend given by the OPCOM, OPCOM apparently is a company which willing to share its profit with its shareholders. No wonder its daily transaction is very low since most of its shareholders are long term investors as me^^.

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Written by: Xaivier Chia


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