Cen Chi Yung: Eagle Pu (01286) Profit and Loss Dividend is High

Eagle Precision (1286) is one of the world's top 10 manufacturers of high precision, high complexity and performance critical casting and machining parts for various end markets. The Group's revenue in fiscal 2021 was $37.8 billion, up 29.2% year-on-year; operating profit earned $3.83 million (prior year offset of $1.48 million), adjusted net profit of $4.22 billion, up 34.7%; earnings per share 20.3 cents, final dividend 7.2 cents, full-year dividend of 10.1 cents, up 1.4 times from 4.2 cents per share in the previous year. The results are brilliant and worth paying attention to.

Last year, all end markets saw a strong recovery, with industrial and other components business showing strong performance, with revenues up 39% to US$17.5 billion, an all-time high; automotive parts revenues of $17.2 billion, up 23.6%; hydraulic equipment components business revenues up 61.4% to $4 billion; engineering machinery and agricultural machinery revenues Revenue rose 55.1% and 57.3% to $2.76 billion and $2.54 billion, respectively; revenue from the leisure marine and vehicle terminals market rose 50.6% to $1.9 billion.

Pursuing a strategy of “globalisation”, “regionalised manufacturing” and “dual-commodity production”, the Group has established a North American production base in Mexico, some of which have been commissioned in November last year; the rest are under construction and are expected to start production this year and significantly increase capacity in the future. The Group's operations will be more flexible and efficient to reduce potential supply chain and tariff risks from geopolitics and significantly shorten supply chain time cycles to improve operational efficiency.

With several countries steadily lifting external border blockades and entry restrictions, international tourism activity is expected to recover and the airline terminal business is expected to become the growth engine of the Group again. In addition, the United States has passed a bill to strengthen infrastructure projects, which will stimulate the demand for engineering machinery and commercial vehicles, coupled with a surge in demand for hydraulic equipment, which is believed to continue to drive the Group's industrial terminal business. The Group has reached price adjustment agreements with key customers at the end of last year, in addition to further improving operational efficiency by optimizing internal processes. The prospects are to gradually improve margins in the future.

Cen Chi Yung, Strategist, Bailliho Securities

※The author does not hold any interest in the above shares

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