RMIH Interim Results

Revenue up 10% – due to LED light bar, the iPads are really driving revenue up despite a bad economy.

Profit margin before tax 5.15% down from 7.15% – due to:

“1. changes in the shipped product mix: increase in revenue was mainly contributed by the LED light bar which has a lower gross profit margin;

2. delay in mass production of the new products of our customers has led to a decrease of utilization rate of our production facilities, and

3. increase in staff cost, as well as other production overhead compared with the same period of previous year”

I think point 2 they mean the iPad mini coming out soon.

ROE before tax 11.57% down from 17.91%

Leverage 2.64 times down from 2.66 times -seems pretty high, but they don’t have a lot of long term debt, so they are able to generate enough cash to sustain a high level of short term debt, mostly payables. This means this company is pretty good. Their gearing ratio is only 22% without payables.

Interim dividends $0.05 per share, interim dividend yield is 3.2% for my average purchase price.

Outlook, the management is always so positive and upbeat about it in every single result announcement. I think they are just talking, and not mentioning the negatives.

I feel this company is worth around $3-$5, my average purchase price is $1.559.


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