Baker Technology: A cash cow company

This is the first time i'm doing a write up on this company called Baker Technology. I've been invested in it since the beginning of 2012 and dividend yield has been great so far. This company has no debt at all with quite a big stash of cash kept away. It's cash position stands at S$205.9 Million currently. This translates to a cash of 23.6 cents per share. At the current trading price of 0.31 cents, isn't it a good bargain? 

Credits: www.bakertech.com.sg

As stated on its website: 

Baker Technology Limited (Baker Tech) is a leading manufacturer and provider of specialised equipment and services for the oil & gas industry. Its core business is in the design and construction of a wide range of equipment and components for use in the offshore environment.

The current situation of the industry which Baker Tech is in is still relatively competitive. Order book has slowed down from 3Q of FY12 to 2Q of FY13. However, for the past 2Q which is the second half of FY13, order book has seen an increase. It's primarily market is in China contributing 76% to its net order book followed by Singapore at 23% and the middle east at 1%.

Credits: www.bakertech.com.sg

With 100% cash and zero gearing(no debt), this company can ride out the downturn relatively easy. During the downturn in 2012 and 2013, this company has given dividends of 10 cents in FY12 and 5 cents in FY13. This is almost 50% dividend yield for the past 2 years. Of course if you had bought the shares at a higher price, the dividend yield is about 40%. Still not bad at all. As i had bought the shares much earlier, i had in fact got back more than 40% of my money.

With cash of 23.6 cents a share and only slightly more than 50% of my initial invested capital in this stock, my risk exposure is relatively small now. I will stay invested in this company and who knows maybe i will get back all my initial invested capital within the next few years. Till then, it would be a free cash cow company providing me income for as long as its there.


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