Sunningdale Tech

2nd May :

Dollar turns positive for 2018 before Fed meeting

Nasdaq closes higher as Apple jumps ahead of earnings

• The tech-heavy index closed 0.9 percent higher at 7,130.70 while Apple climbed 2.3 percent.
• Apple, the largest publicly traded company in the U.S., is scheduled to report fiscal second quarter earnings and revenue Tuesday after the close.

Sunningdale Tech first quarter 2018 Net Profit plunges 75% to $1.9m. EPs Of 1.3 cents.


During 1Q2018, the Group suffered foreign exchange losses of S$5.2 million as compared to foreign exchange losses of S$2.1 million for 1Q2017. This was primarily attributed to the depreciation of the US Dollar against the respective functional currencies of the Group’s entities. Excluding the impact of foreign exchange losses, one-off disposal gains and retrenchment costs, the Group’s core net profit declined 25.5% yoy to S$7.1 million.


Despite the slowdown in the Consumer/IT segment during the quarter, there are plans to progressively ramp up production for new projects within this segment that will carry through to the second half of 2018.

Looks like 2nd half may see much better result 
Not a call to buy or sell.
Please do your own due diligence.

 Despite continued improvements to operational efficiency, the Group’s gross profit declined 17.2% yoy to S$21.4 million while gross margin declined to 12.7%. This decline was due primarily to lower utilisation levels as a result of lower orders in the Consumer/IT segment.

Furthermore, if exchange rates had remained the same as 1Q2017, the Group would have reported an additional S$2.8 million gross profit while gross margin would have been at 14.0%.

(S$'000) 1Q2018 1Q2017  Change Profit for the period 1,940 7,698 (74.8)% Adjustments:    Foreign exchange loss 5,205 2,123 n.m. Retrenchment costs - 113 n.m. Gain on disposal of PP&E (36) (387) n.m. Core net profit 7,109 9,547 (25.5)%

  Despite continued improvements to operational efficiency, the Group’s gross profit declined 17.2% yoy to S$21.4 million while gross margin declined to 12.7%. This decline was due primarily to lower utilisation levels as a result of lower orders in the Consumer/IT segment. Furthermore, if exchange rates had remained the same as 1Q2017, the Group would have reported an additional S$2.8 million gross profit while gross margin would have been at 14.0%.  (S$'000) 1Q2018 1Q2017  Change Profit for the period 1,940 7,698 (74.8)% Adjustments:    Foreign exchange loss 5,205 2,123 n.m. Retrenchment costs - 113 n.m. Gain on disposal of PP&E (36) (387) n.m. Core net profit 7,109 9,547 (25.5)%  During 1Q2018, the Group suffered foreign exchange losses of S$5.2 million as compared to foreign exchange losses of S$2.1 million for 1Q2017. This was primarily attributed to the depreciation of the US Dollar against the respective functional currencies of the Group’s entities. Excluding the impact of foreign exchange losses, one-off disposal gains and retrenchment costs, the Group’s core net profit declined 25.5% yoy to S$7.1 million.  The Group continued to generate strong positive operating cash flows of S$6.9 million for 1Q2018. This contributed to balance sheet strength with cash and cash equivalents amounting to S$105.4 million.   The Group continued to generate strong positive operating cash flows of S$6.9 million for 1Q2018. This contributed to balance sheet strength with cash and cash equivalents amounting to S$105.4 million.

 Looking ahead, the Group continues to reinvest in technology and new machinery in order to stay ahead of the curve in a dynamic business environment where change is the only constant. To that end, CAPEX rose to S$13.2 million for 1Q2018.


This is supported by the latest opening of the Group’s 20th manufacturing facility located at Penang, Malaysia.

Being strategically located in close proximity to the Group’s customers, capacity would be added progressively to support new contract wins. Over-time, this latest facility is also expected to serve customers in the Group’s other two business segments –Automotive and Healthcare.

In conclusion, Mr Khoo added, “Our order book is stable as existing organic growth initiatives have led to queries from new and existing customers who are confident in our ability to handle challenging projects on a global scale.

 Heading into the remainder of the year, we are vigilant of the headwinds such as foreign exchange volatility and rising labour costs.

 Our focus on boosting the productivity and operational efficiency of our core operations continues to garner momentum. While the business environment and macroeconomic uncertainty present challenges to our operations, we remain confident in the Group’s long-term sustainability and profitability

Quote: Jeremyowtaip

I saw an article written by The Edge Singapore and also went through their 1Q financial results announcement.

From both the article by The Edge Singapore and also from Sunningdale's 1Q results, I noticed three things affecting Sunnningdale's 1Q 18 results y-o-y as compared to 1Q 17.

1. Adverse foreign exchange losses due to weakening of USD versus other currencies such as RMB, RM and SGD affecting both revenue and net profit. I noticed that the amount of forex losses registered can be quite substantial to cause a significant decrease in net profit.

2. Increase in competition and labour cost has caused a decrease in net profit y-o-y. I noticed their administrative expenses has increased y-o-y reflecting this increase in labour cost.

3. Advancing of orders for consumer/IT segment in 1Q17 and comparatively lesser work orders received and completed in 1Q 18. Thus, the revenue for consumer/IT segment has decreased y-o-y and dragged down overall revenue.

However, from their commentary on the outlook for the second half of the year, they are optimistic there will be a ramp up of orders for their newly built Penang manufacturing plant which has started some pilot runs for mass production for consumer/IT segment. Despite this, the company expects their performance for the rest of the year to be affected by volatile forex movements, keen competition and increase in labour cost. The company is still overall optimistic that their business model is resilient and sustainable and should be able to weather this current challenging operating environment.

My take is to continue to monitor their progress for the rest of the year which hopefully as what the management has mentioned, second half of the year should be better. However, if one notice that there are any significant deterioration in it's businesses such as winning even lesser orders going forward from new and existing customers, then one has to investigate whether the company is starting to lose it's competitive edge versus it's competition especially in the consumer/IT segment which is the one which is currently impacted. For now, just monitor their progress going forward.