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Notion total equity as reported in their latest quarterly earnings is 101.686 mil. Historical ROE (earnings/equity) based on equity of 101.686 mil is as follows.
Notion total equity as reported in their latest quarterly earnings is 101.686 mil. Historical ROE (earnings/equity) based on equity of 101.686 mil is as follows.
roe
2005 18.33%
2006 21.14%
ttm 26.72%
Kenjiro,
I took a terrible short cut in the historical tables.
As it is the tables are based on current number of shares and current equity. Which is not too accurate cos the number of shares could change each year - it's easily affected by placement shares, esos, bonus issues etc, etc. So could the equity.
So please work out the tables again.
For example in fy 2005, notion's number of shares was 293.160 million shares. This has now ballooned to 586.319 million shares.
As stated above, Notion Vtec is a precision parts supplier with majority sales to HDD makers and digicam makers.
HDD has previously lost ground due to the introduction of flash memory. However, I feel that in the past few years HDD is making a comeback from the increase in production in the local HDD players i.e. Western D, Komag, Showa Denko, Toyo memory etc. We've been hearing about HDDs in TVs and handphones for a while now. I've heard of the 10mm HDD in handphone for some time but have yet to see it. If indeed these are introduced there will be a boom in demand for HDDs which in turn will benefit companies like Notion Vtec.
However can anyone spot the economic moat on this company? Tech stocks are infamous for lacking one in view of shorter product cycles and newer technologies coming out.
The advantages I see with Notion Vtec are:
1. Proven track record with MNCs. For a new precision part maker, there will probably be a lot of teething problems in the beginning with their precision pars. MNCs might be more comfortable in buying from an established vendor
2. Larger manufacturing capacity. Newer players will have to spend large capex to compete
3. Vendor accreditation. A lot of test runs and parts qualifications will be done before they are deemed suitable for production. A new player will have to spend some time and money in order to be a qualified vendor
Possible risks?
1. Even though Notion Vtec has a proven track record. It is NOT impossible for another company to set up precision parts manufacturing to rival them.
2. MNCs will always look to cut down their costs. Even though it is tough to get their business, MNCs are not totally adverse to look for cheaper solutions. They started off by buying parts from overseas i.e US, then cheaper parts can be gained from Singapore and finally we have our local supply. What happens if there is another cheaper alternative to Notion?
3. Notion has a concentration client base. If for some reason, say Western D will shift most of their operation to a new plant in Thailand or Vietnam, will it affect Notion's sales?
I'm just giving my casual opinions on Notion as a business, I have no idea about Notion as a stock since I don't follow it. I'm still waiting for others' comments about that.
