FPI (9172) FORMOSA PROSONIC INDUSTRIES BERHAD - Building Long Term Solid Future
Established in 1989, FPI is one of the leading OEM of high quality sound system in Malaysia, including conventional speaker systems, smart audio systems and musical instrument components.
FPI has evolved from manufacturing of conventional speaker systems to smart audio systems and musical instrument components, including design and development of wireless and bluetooth speakers with cutting edge functionality and seamless connectivity. Its strong team of audio experts has over 30 years of experience in the design, manufacturing and marketing of sound system products to worldwide multinational companies.
The behavioral shift in how people listen to music inside and outside their homes will boost demand for portable speakers and sound bar. In fact the speaker market is project to grow at a 4-year CAGR of 17% from 2018-2022 to reach USD27bil, driven by demand for streaming wireless audio device.
In addition FPI's tied up with Winstron, a Fortune Global 500 company will play into extending the global reach for FPI. Recently major business won by Winstron for Apple have started to play a factor into boosting FPI's revenue. Clearly FPI's diversification from convention speaker systems into smart audio systems have begun to pay off. 2019 have been a record year for FPI with revenue increasing by 36% year over year and PAT increase of 14%.
From 2019 onwards, FPI Capex have reduced significantly as they have managed to startup their new factory at the beginning of the year. This was after they have pumped in close to RM 24 million of CAPEX over the last 4 years in aggressive expansion.
In the near term, recent Covid-19 pandemic may put a damper onto upcoming Q1 results judging from the inventory that FPI is currently holding, however in the long term FPI is sound. The current favorable USD to Ringgit exchange rate may also offer some protection against extreme downside this quarter. Some other potential downsides include recent minimum labor wage laws that have been passed in Malaysia.
A zero debt, cash rich company with it's Cash/share growing to 0.82 at the end of 2019 selling at an undemanding PE of just over 10. Coupled with a good dividend yield over the years - what is there not to like about this company.
- CH Cheah
https://www.facebook.com/pg/Our-Investment-Journey-%E6%88%91%E4%BB%AC%E7%9A%84%E6%8A%95%E8%B5%84%E5%8E%86%E7%A8%8B-106802820776934/posts/?ref=page_internal
https://klse.i3investor.com/blogs/GTRONIC/2020-03-08-story-h1484749454-FPI_Building_Long_Term_Solid_Future.jsp
