A good quarter start for Serial

Serial System announced good sets of results for 2012 Qtr 1; some highlights as below :-

- turnover though declined 4% vs yago but excluding Unitron Tech which was disposed in 2011, Serial actually posted 9% increase in turnover amidst a challenging operating environment. Excluding Unitron, turnover in North Asia (comprising Greater China, South Korea and Taiwan) increased by 7%; turnover in South East Asia and India increased by 22% - mainly due to contribution from Intraco Technology which was acquired in May 2011.

- wise and sensible strategy by Serial to focus on sale of higher margin products.  Gross profit margin improved from 9.0% in 1Q2011 to 9.4% in 1Q2012.

- Total expenses increased from S$14.9 million in 1Q2011 to S$16.4 million in 1Q2012. This is actually in line with higher turnover as mentioned in the above. Key highlights here are increase in headcount to grow newer product lines and from business acquisitions made in 2011; increase in mandatory staff related costs; higher sales commission; higher office rental expenses, bank charges and various administrative expenses; higher professional fees due to corporate branding exercise; higher finance expenses due to higher utilization of trade facilities and higher costs of borrowing when comparing 1Q2011 and 1Q2012 but l am expecting this to improve as the total borrowings status as of 1Q2012 has lowered; other operating expenses reduced mainly due to lower allowances for inventory obsolescence offset by higher depreciation charges, amortization charges for distribution rights, impairment provision for goodwill arising from acquisition of subsidiaries as compared to 1Q2011.

- Trade and other receivables increased by about S$5.5 million mainly due to longer average credit period granted to customers.  I am certain Serial will keep a very close tab of the situation to avoid problem with collections.


- Inventories decreased by about S$19.6 million mainly due to tighter inventory management.

- Bank loans and borrowings reduced by about S$21.8 million due to repayment of trade facilities from cash generated from its operating activities.


- Trade and other payables increased by about S$4.1 million due to higher purchase and longer average payment terms to certain suppliers.


It seems that Serial did not issue a Qtr 1 results in 2011 so l reckon this 1Q2012 results release is to inform stakeholders that it is having a good quarter start into 2012 and it is (still) in good shape as always.

IMHO Serial share price is really undervalued at its Friday close at $0.116.  Serial deserves a much higher share price level.  Minimal level at least is its NAV level which is a fair pricing at $0.1427.



previous posting :- Serial System fighting on