Saturday, May 20, 2006


This weekend we start off with a comparison between 3 manufacturers

AEI Corp - Engineering of aluminium extruded products
Electrotech - European mechatronics and engineering
Elec - Mass production of HDI,microvia backplanes, high-end servers and up to 36 layer PCB

all three has taken abit of a beating during the recent correction. This may have presented a wonderful opportunity to get in.

except for Electrotech, all of them have yields in excess of 6%. electrotech is no slouch either at 5.36%

Below shows some key figures:

Judging from the above, it would seem that though AEI and Electrotech do provide reasonable high yields, they do not have the same payout history and sustainability as Elec.

However, i am quite particular about the negative free cashflow of Elec. with that kind of capital expenditure we would expect them to cut back their dividend. however they did not. I'm still thinking whether its a good move to do that or not.

I am leaning more towards Electrotech. Their free cashflow yield looks more sustainable and they are building its cash holding better than the other 2. However, this is only a screen of their balance sheet, much work has to be done to investigate the outlook for these 3 companies.

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