SERIAL SYSTEM's shares have climbed the heights this year: from 6.5 cents at the start of 2010, it recently touched 16 cents for a 146% gain.
The stock performance has mirrored the business performance: Serial achieved $6.5 million in net profit in the first half of this year, compared to $1.2 million in the previous corresponding period.
That’s good enough reason for Serial’s chairman, Derek Goh, to beam these days.
He appears to have another reason: he is sure the best is yet to come for Serial, which is in the business of distribution of semiconductors and electronic components. Its principals include Texas Instruments, Tyco Electronics and Telegent Systems.
If you had listened to him enough times, you’d know he is upbeat about the prospects of business growth for Serial.
At CIMB today, he pointed to Serial’s track record of outpacing the growth of the semiconductor industry.
Serial's revenue achieved compounded annual growth of 16% between 2005 and 2009, almost twice as fast as industry’s 9% rate in Asia Pacific between 2005 and this year.
In 2008 and 2009, when the industry declined, Serial posted growth of 7% and 9%, respectively.
“There is significant room for Serial to grow,” he said to investors today.
Some of Serial’s growth strategies:
* Extension of existing product lines from local to regional markets.
* New product lines.
* Growing its nascent Taiwan and Indian markets, and its established markets of China and South Korea.
Supporting its growth ambitions is a network of 45 sales offices, 560 employees in Asia Pacific serving over 4,000 customers. No single customer accounts for over 5% of Serial’s revenue.
In the electronic distribution industry, Serial has one of the largest geographical presence in Asia.
In China alone, Serial has 24 offices – which help explain why Serial has high growth in China. In 1H10, revenue from China grew 90% to US$155.5 million, accounting for 59% of Serial’s total revenue.
China’s own strong economic growth is invigorating a variety of industries which Serial distributes components to such as consumer electronics, security, automotive, industrial, and medical devices.
The reward for shareholders has not been just the juicy capital gains on their shares but also Serial's dividend payouts. This year's interim payout was 0.28 cent a share.
The final dividend is expected to be roughly 0.56 cent a share based on Serial's guidance of a 40-50% payout for the full year from its full year net profit. Assuming an investor bought the stock at 10 cents earlier this year, he would enjoying a juicy dividend yield of 8.4%.
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