Why am i investing in Avi-Tech?

Avi-Tech is a total solutions provider for Burn-In Services, Burn-In Board Manufacturing and PCBA Services, and Engineering Services for the semiconductor, electronics, and life sciences industry.

It was incorporated in 1981 and listed on SGX in 2007.

- Avi-Tech achieved ISO 13485 certification at the end of 2009 which confers recognition on her comprehensive quality management system in the provision of medical devices and related services.
- Avi-Tech had her good years in highest revenue record of 70.4mil in 2007 & 74.3mil in 2008 with a net profit of 15.5mil & 11.9mil.
- Avi-Tech started to make a loss since Q3 of 2011 when she incorporated two new subsidiaries in the USA, Verde Designs, Inc. and Aplegen, Inc.
- There are 3 consecutive years of loss making since 2012 to 2014 mainly caused by the two subsidiaries as mentioned above.
- At the end of 2014, Avi-Tech initiated to liquidate both subsidiaries which Aplegen, Inc's  liquidation was completed in Q42015 and Verde Designs, Inc's in Q22016.

Possible Merits of Avi-Tech:
(1) Strong balance sheet (as per June 2016)
      - NAV: 45.3mil
      - Working capital: 30.9mil
      - Total Asset: 52.7mil
      - Total Liabilities: 7.4mil
      - Bank borrowing: 1mil

(2) Consistent higher Profit from loss making in 2014
      - 2014, net loss of $9.9mil
      - 2015, net profit of $6.6mil with operating profit of 3.7mil (discontinued operation profit 2.8mil)
      - 2016, net profit of $6.2mil with continued operation profit of 6.4mil (increased by 73% from 2015)
   
(3) Consistent higher Revenue since 2014
      - 2014, revenue: 23mil, revenue from continuing operation: 15.1mil
      - 2015, revenue: 28.4mil (increased by 23.5% from 2014) - revenue from continuing operation 26.9mil (or 78% continuing operation's revenue increased from 2014)
      - 2016, revenue: 33.9mil (increased by 19.5% from 2015) or (26% continuing operation's revenue increased from 2015)

(4) Consistent higher Gross Profit Margin (GPM) & Net Profit Margin (NPM) since 2014
      - 2014, GPM = 14.3%, NPM = -
      - 2015, GPM = 24.3%, NPM = 13.7% (3.7mil/26.9mil) - from continuing operation only
      - 2016, GPM = 32.3%, NPM = 18.9% (6.4mil/33.9mil) - from continuing operation only

(5) Giving consistent dividend for the past 2 years
      - 2015: 1.3cents
      - 2016: 1.8cents
      (dividend story is a bit too short to conclude as normally will prefer to have at least 5 years of dividend story).

(6) Management is the majority shareholder
     - The CEO, Mr Lim Eng Hong is holding 33.8%

(7) Management is confident with the future outlook of the company.
 

Possible Risks of Avi-Tech:
(1) The revenue trend for the past 10 years is not very consistent, so future's revenue is not very predictable.
      E.g:
      - From year 2007 revenue has increased of 92% revenue growth from $36.6 million in FY2006 to $70.4 million in FY2007,
      - From 2007 - 2008 increased by 5.5% from 70.4mil to 74.3mil,
      - From 2008 - 2009 decreased by 137% from 74.3mil to 31.3mil,
      - From 2009 - 2010 decreased by 5.5% from 31.3mil to 29.6mil,
      - From 2010 - 2011 increased by 14.6% from 29.6mil to 33.9mil, etc

(2) Avi-Tech is in semiconductor, cyclical industry.