Serial System

CIMB Squawk Box Serial System Ltd (SERL SP; S$0.09) Serial System\'s peers, WPG Holdings and Yosun Industrial (Asia\'s largest and second largest IC distributors), have announced their merger on 20 March via a 100% share swap. Based on Bloomberg data, the deal values Yosun Industrial at a historical Dec-09 P/E of 12.3x and P/BV of 2.36x (Per Bloomberg, Yosun Industrial has not announced its Dec-09 results yet). Our valuation of 10.1x P/E for Serial System, which implies 1.28x P/BV, remains reasonable against valuations set by this M&A deal. Just for interest, at the M&A valuations set by the WPG-Yosun industrial merger, Serial System would be worth S$0.135 (historical 09 P/E) and S$0.28 (historical 09 P/BV). We re-iterate our BUY call on this stock with a target price of S$0.16.

SIAS\' initiation coverage is attached, fyi.

From Yahoo News : NEW YORK – A new report on information technology provided further evidence that an industry recovery is under way, with U.S. spending now expected to grow faster than previously believed. Forrester Research now expects information-technology spending in the U.S. to grow by 8.4 percent this year, to $550 billion. That is up from its January forecast, of a 6.6 percent increase compared with 2009. The better outlook is helped by higher spending on communications equipment than Forrester previously expected, accompanying the ongoing rebound in computer and software purchases. The worldwide tech market, meanwhile, will grow by 7.7 percent as measured in U.S. dollars, to nearly $1.6 trillion. This is slightly lower than Forrester\'s previous forecast of a 8.1 percent growth. That\'s because the Greek financial crisis weakened the euro and strengthened the U.S. dollar, Forrester analyst Andrew Bartels said. Technology spending looks to have hit bottom in the third quarter of 2009 and started to turn around late in the year, according to Forrester. As expected, technology spending in the fourth quarter were \"generally level with or slightly higher than the same period in 2008 — clear evidence that the downturn is over and that renewed growth has started,\" Bartels said in Thursday\'s report. Spending on computer equipment and software will be strong this year, with percentage growth in the double digits for both sectors, Forrester predicts. Many businesses had put off replacements and upgrades during the economic downturn. Information-technology consulting services and communications equipment will each grow by about 7 percent. IT outsourcing will see slower growth, just under 4 percent, though it had been the only sector to grow last year. A recent earnings report from business software company Oracle Corp. confirms Forrester\'s outlook. For the fiscal third quarter that ended in February, the company posted a 17 percent revenue increase, to $6.4 billion, a sign that large companies are steadily boosting their technology spending. news.yahoo.com/s/ap/20100408/ap_on_hi_te..._technology_spending

Serial System could be really enjoying business boom. Even independent director Peter Ho bought 850,000 shares when he previously had zero. The chairman, Derek, also has been buying at 10 c. The independent director bought 850K shares, which is even mroe than the chairman. Wah, wonder what the 1H profit will look like.

Derek Goh, the chairman & CEO, stepped in to buy 550,000 of his company’s shares, increasing his stake to 259.8 million, or 35.72% of the issued capital. These were his first purchases since Aug 2007, and were made at 10 cents a share despite a whopping rise in the stock from 6 cents since January this year. The company, which distributes electronic components mainly in China, is enjoying a business boom. Q1 net profit stood at $2.9 million, up 314% from $0.7 million in 1Q 09. If annualized, the $2.9 million translates into $11.6 million net profit – which would be a record for the company. That would also be a 55% jump from last year’s $7.5 million profit. Another Serial System insider, non-executive director Peter Ho, bought 850,000 shares last week, which is even more than Derek Goh. Interestingly, prior to this purchase, Mr Ho didn’t hold any shares of Serial. The biggest buyer in recent times - April 30 this year - was Sam Goi, the No.2 shareholder after Derek Goh. He added 4.58 million to his holding, bringing the total to 70.2 million, or 9.66% of the share capital. taken from 6 June article: www.nextinsight.biz/content/view/2524/60/

stock has been holding steady at 11 cents, refused to go below 10 cents. Well, this may be boom time for Serial, I believe, going by the stock purchases by CEO and SS Sam Goi.