E&E - Introduction

Background

Founded over 35 years in Hong Kong, Elec & Eltek International Company Limited (E&E) was listed on the SGX Mainboard on 5 September 1994. Its principal business activities include manufacturing and distribution of high-density double-sided and multi-layer printed circuit boards (PCBs). It has 22 offices worldwide and 17 plants in Asia (1 in Hong Kong, 2 in Thailand and 14 in China) with total annual production capacity of over 56 million square feet.

PCBs are used in the production of wide variety of electronics products, ranging from consumer products such as toys, electronic games and audio visual equipment, to more sophisticated products such as mobile phones, PDAs, computers, and networking and telecommunications devices. Other products in which PCBs are used include automotive components and advance medical equipment.

Parent Company - Kingboard

E&E was acquired by Kingboard Chemical Holdings Limited (Kingboard) in 2004 and has became the largest PCB enterprise in China. Kingboard is a leading vertically-integrated electronics materials manufacturer and one of the world's largest laminate producer (Laminate are used in the production of PCBs). With Kingboard's other PCB companies (Techwise Circuits Company Limited and Jiangmen Glory Faith P.C.B Co., Ltd.), the Group was ranked one of world's top PCB players in terms of sales revenue in 2006. (See table below)



Products and Services

High density interconnect (HDI)

Microvia

Backplanes

High-end servers

PCBs (up to 40 layers)

Quick-Turn Around (QTA) (custom-designed PCBs that are delivered in shorter term than usual production lead-time)

Customers

Sectors:

- Computer and computer peripherals

- Communicatin/networking

- Consumer electronics

- Automotive

Major customers in FY2006:

Others include:
- Jabil Circuit
- Minebea
- Celestica

- Simens

- InFocus

- Mitac

- NEC

- Samsung

- Alcatel

- Hitachi

- Sony

- Johnson Control

- Ericsson

Comparables

Environmental Management System

This last part may not be relevant for investment analysis but it adds some positive affirmation to my personal investment decision in the company. =)

All of E&E's plant operates under a common environmental management system (EMS) framework that is believed to provide the most consistent and effective way to protect the environment and pursue continuous environmental improvements in its global operations.

Quoting from its website:

"In contributing to sustainable development at all levels of society, we have developed a balanced business strategy that meets environmental protection, economic and social needs. We are sponsoring local communities to support habitat conservation. Elec & Eltek realizes that one company alone cannot do much for the environment. It is our hope, however, that we can still environmental consciousness in others and that our efforts will have a multiplier effect throughout the community."

Source:
E&E website: http://www.eleceltek.com/sub_index.htm
Kingboard website: http://www.kingboard.com/kbeng/index.asp
DBS Vickers Report dated 27 March 2007 by Don See
CIMB Report dated 25 August 2006 by Jonathan Ng

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1) Investing is fun, exciting, and dangerous if you don't do any work.

2) Your investor's edge is not something you get from Wall Street experts. It's something you already have. You can outperform the experts if you use your edge by investing in companies or industries you already understand.

3) Over the past 3 decades, the stock market has come to be dominated by a herd of professional investors. Contrary to popular belief, this makes it easier for the amateur investor. You can beat the market by ignoring the herd.

4) Behind every stock is a company. Find out what it's doing.

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6) You have to know what you own, and why you own it. "This baby is a cinch to go up!" doesn't count.

7) Long shots almost always miss the mark

8) Owning stocks is like having children-don't get involved with more than you can handle. The part-time stock-picker probably has time to follow 8-12 companies, and to buy and sell shares as conditions warrant. There don't have to be more than 5 companies in the portfolio at any one time.

9) If you can't find any companies that you think are attractive, put your money in the bank until you discover some.

10) Never invest in a company without understanding its finances. The biggest losses in stocks come from companies with poor balance sheets. Always look at the balance sheet to see if a company is solvent before you risk your money on it.

11) Avoid hot stocks in hot industries. Great companies in cold, non-growth industries are consistent big winners.

12) With small companies, you're better off to wait until they turn a profit before you invest.

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15) In every industry and every region of the country, the observant amateur can find great growth companies long before the professionals have discovered them.

16) A stock-market decline is as routine as a January blizzard in Colorado. If you're prepared, it can't hurt you. A decline is a great opportunity to pick up bargains left behind by investors who are fleeing the storm in panic.

17) Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and stock mutual funds altogether.

18) There is always something to worry about. Avoid weekend thinking and ignore the latest dire predictions of the newscasters. Sell a stock because the company's fundamentals deteriorate, not because the sky is falling.

19) Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what's actually happening to the companies in which you've invested.

20) If you study 10 companies, you'll find 1 for which the story is better than expected. If you study 50, you'll find 5. There are always pleasant surprises to be found in the stock market-companies whose achievements are being overlooked on Wall Street.

21) If you don't study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.

22) Time is on your side when you own shares of superior companies. You can afford to be patient - even if you missed Wal-Mart in the first 5 years, it was a great stock to own in the next 5 years. Time is against you when you own options.

23) If you have the stomach for stocks, but neither the time nor the inclination to do the homework, invest in equity mutual funds. Here, it's a good idea to diversify. You should own a few different kinds of funds, with managers who pursue different styles of investing: growth, value, small companies, large companies, etc. Investing in six of the same kind of fund is not diversification.

The capital gains tax penalizes investors who do too much switching from one mutual fund to another. If you've invested in one fund or several funds that have done well, don't abandon them capriciously. Stick with them.

24) Among the major stock markets of the world, the US market ranks eighth in total return over the past decade. You can take advantage of the faster-growing economies by investing some portion of your assets in an overseas fund with a good record.