PIE ... Oct10

The wire and cable manufacturers, which exports mainly to the US, has been building its cash pile aggressively in recent years. The company’s cash and cash equivalents as at Dec 31, 2009 stood at rm119.9 million.

With 64 million issued shares, its cash per share works out to RM1.87. Naturally the market is wondering what PIE plans to do with all that cash.

It is spending RM35 million to RM40 million on acquiring two lots of ready made factories to expand its production capacity.

PIE has three factories in Malaysia and three in Thailand. Industry observers say it is gearing up for higher demand for cables used in electronic products in anticipation of an improving global economy.

It started out as manufacturer of wires and cables, but has since expanded into electronic manufacturing services, also known as contract electronic manufacturing. Its EMS division contributed about 64% to group revenue in FY2009, overtaking its raw wire and cable manufacturing division, which contributed 24%.

PIE manufactures wires and cables for electronic gadgets used in everyday life like mobile phones, notebooks and home appliances.

About 90% of its business is traded in US dollars while a global shortage of electronic components has pushed up the cost of materials.

It has a net asset value per share is rm3.48. Almost half of its market cap of RM259 million is backed by cash. Its books are clean with no debts, which means it is in a healthy net cash position.

The dividend payout depends on company performance. As an informal policy, it maintain at least two thirds of profit as dividend to shareholders, provided there is no huge capital expenditure or business expansion expected.

Pan Global Holdings Co Ltd owns 51.4% stake. iCapital is the second largest shareholder with 5.32% stake.

Speculation that it will eventually be an undervalued stock and this makes it an easy privatization target, especially since it is tightly held by a single major shareholder. However, Pan Global Holding has not intention to privatize PIE at the moment.