Thursday, 19 August 2010

Broadway - Technical and Fundamental Analysis


Broadway Industrial Group Limited engages in the manufacture and sale of foam plastics and packaging products. It provides expandable foam plastics primarily for customized protective packaging of consumer electronics, household appliances, telecommunication, and information technology products; insulation material for industrial and general construction applications; and absorption component parts for the automotive industry. The company also manufactures and distributes actuator arms and related assembly for the hard disk drive industry; and precision machined components for industrial products used primarily in automotive and semi-conductor sectors. It operates in the People's Republic of China, Singapore, Thailand, and the United States.

The chart showed an amazing recovery from beginning of 2009 where it was trading at around 15c in March 2009  to the current price of 113c in Aug 2010. That is a whopping 7.5x return in less than 2 years. (sigh, why didn't I buy it at that price.. haha). Technically, the share price looked well supported at around the 95-100 levels.

Valuation








At today's closing price, it is trading at PER of 5.1 based on 2010 estimated earnings and an EV/EBITDA of only 3x! DMG has a target price of $1.46 in its 2 Aug 2010 report. I would think that the company is still trading at attractive valuation at current price.  In my view, a fair value of EV/EBITDA of 5x would mean a price target of $1.86.


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