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NRA Capital Pte Ltd

Written by: NRA Team

Wednesday 13 Jan 2016

Miyoshi Limited – 1Q16 (FYE 08/16) results

Improving profitability deserves attention

We are encouraged by Miyoshi’s budding track record of profitability. With a shift into more viable business segments, this company has scope to provide further upside.


Miyoshi Limited released its results for 1Q16 (FYE 08/16), achieving a net profit of S$296,000 compared to net loss of S$969,000 in 1Q15 (FYE 08/16). The turnaround was achieved in spite of revenue falling 13.4% year-on-year to S$11.8m in 1Q16 from S$13.7m in 1Q15. The results follow from a full year net profit of S$627,000 in FY15 (FYE 08/15), which was an improvement from the FY14 (FYE 08/14) net loss of S$17,000.

Key points

  • Overall revenue fell by 13.4% yoy as a result of a reduction in the data storage segment. Data storage revenue fell by 40.5% yoy to S$4.4m from S$7.4m in 1Q15. As such, data storage constituted only 37.3% of total revenue in 1Q16, compared to it constituting 54% of revenue in 1Q15. Miyoshi attributes this reduction to fewer sales orders from hard disk drive customers.
  • On the other hand, consumer electronics revenue grew to reach S$5.8m compared to S$5.4m in 1Q15, while automotive, microshaft and others increased to S$1.6m from $0.9m. We note that Miyoshi has been investing in new businesses in its photo imaging segment for consumer electronics, and the pickup in the automotive segment bodes well for Miyoshis participation in the Light Electric Vehicle (LEV) sector in China.
  • In addition to registering positive net profit for 1Q16 (FYE 08/16), Miyoshi has registered positive operating cash flow due to an improvement in its receivable and payable mix. It remains to be seen whether this improvement in its working capital requirements are indicative of improvements in managing their costs, but we nevertheless accept this as a positive point in Miyoshi’s favour.
  • Miyoshis cost rationalization comes largely from its data storage business section, with reductions in unprofitable lines contributing greatly to the improvements in the bottom line. The outlook for data storage manufacturing continues to be pessimistic, and squeezed bottom lines for Miyoshi was a major factor in the reduction of its net profitability in this segment previously.
  • In our view, the data storage business is likely to face continued pressures for the foreseeable future. It is therefore a good decision by Miyoshi to focus on consumer electronics and the automotive, microshaft and other business segments, where new products being launched by Miyoshi have been registering positive reception by customers.


Miyoshi has been continuing its trend of cost rationalization successfully, which was critical to allowing it to turnaround its performance in FY15 and achieve full-year profitability. Beyond returning to net profitability, the strengthening of the cash flow and balance sheet increase the options that Miyoshi has to develop its burgeoning LEV businesses in China. Currently Miyoshi trades at S$0.053, with a PER of 13.6x, lower than its 3 year average of 28.7x.

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