For the second year in a row, Penang-based Dufu Technology Corp Bhd wins The Edge Billion Ringgit Club (BRC) Award for Highest Three-Year Shareholder Returns in Industrial Products and Services – demonstrating that it belongs to the big ‘clubs.
Main Market-listed Dufu is a Taiwan-based company that supplies disk spacers and other precision machining components to the hard disk drive (HDD) industry.
During the period under review, Dufu generated an impressive three-year compound annual growth rate (CAGR) of 130.8%. Its adjusted stock price fell from 34 sen on March 30, 2018 to RM 3.61 on March 31 of this year. Notably, Dufu had completed a one-for-one bonus issue on August 5 last year, which benefited nearly 7,800 account holders.
The company also rewarded its shareholders with a total dividend payout of RM 26.1 million in the fiscal year ended December 31, 2020 (fiscal year 2020), which was its highest distribution declared in a fiscal year. . The five sen dividend per share represented a payout rate of 57% – slightly higher than its 50% dividend policy.
In fact, Dufu was already recognized for its lucrative prowess two years ago before it became a billion ringgit company. It won the The Edge Malaysia Centurion Club Corporate Awards 2019 for the highest three-year after-tax profit growth in industrial products and services. The Centurion Club rewards promising companies with a market capitalization of less than 1 billion ringgit.
Dufu became a member of BRC in 2020, with its market capitalization exceeding the billion RM required for membership on January 16, 2020, and remained above that level during the membership limit measured that year.
According to Absolutestocks.com, Dufu’s market capitalization has increased more than 11 times in three years, from 175.71 million RM on March 30, 2018 to 2.007 billion RM on March 31, 2021.
The counter has continued to rise over the past six months, and at the close of RM4.26 on October 15, the company was valued at RM2.271 billion. Bloomberg data shows the stock is currently trading at a historic price-to-earnings ratio of around 35 times and a price-to-sell ratio of 6.8 times.
It should also be noted that Dufu has been in a net cash position over the years. Its cash position stood at 71.8 million ringgit as of June 30 of this year.
Executive Chairman Li Hui Ta said he feels blessed that although Dufu’s operations in Malaysia and China have both been affected during the various stages of the Covid-19 pandemic, the group is managing to stay resilient in the midst of uncertainty.
“This (fiscal year 2020) has been a year of significant milestones for the financial and non-financial performance of the group,” the 62-year-old wrote in the company’s annual report.
In fiscal year 2020, Dufu achieved a new record turnover of 298 million RM, which represents a growth in turnover of 19% from the 249.1 million RM a year ago. year.
Meanwhile, the group’s profit for fiscal 2020 increased 16% year-on-year to RM 51.8 million, from RM 44.5 million a year earlier. The better financial performance is due to the growth in the volume of shipments of components for enterprise memory storage devices.
Li was appointed Executive Director and Chief Financial Officer of Dufu in September 2006. He was re-appointed Executive Chairman in June 2015.
Li is the largest shareholder of Dufu, with a 20.339% stake as of June 25. He started his career as an engineering supervisor at He Li Ying Precision Industry, Taiwan, in 1981, dealing with precision components. About two years later, Li was promoted to general manager, where he was responsible for all of the company’s operations.
In 1984, Li co-founded Lee Bai Corp Ltd in Taiwan to manufacture precision die-change quick-change systems for component stamping and tooling. Six years later, he co-founded Dufu Industries Sdn Bhd to manufacture precision tools and precision machining parts for computer components.
In total, Li has about three decades of experience in the precision tooling industry and the computer numerically controlled (CNC) precision machining industry.
Going forward, Dufu expects the operating environment to remain volatile due to the challenges of the pandemic. But Li believes Malaysia is well positioned for an economic recovery, capitalizing on the upward trend in external demand for raw materials and manufactured goods.
“For us at Dufu, we see a healthy order flow from existing customers, coupled with confirmed orders from new customers. The demand for the HDD business remains strong with the proliferation of demand linked to the cloud, which is fueling the group’s growth, ”he wrote in the annual report.
Li added that Dufu is also optimistic about the group’s non-hard drive segment, as spending on semiconductor and technology hardware equipment remains high by domestic equipment exporters.
“Our engineering and manufacturing team has been busy lately, focusing on performing production process verification activities and aligning with customers’ product design requirements and specifications. ”