Analyzing Bargain Stocks

Dutech (‘company’) is listed in Singapore and primarily operates in two segments: a) High security solutions (HSS): Manufacturing safes for ATM machines, banking, and commercial use; and b) Business solutions (BS): Manufacturing ticketing/vending machines (used for parking, gaming, lottery, etc.) and wholesaling semiconductor and precision machine parts. Though both segments contribute equally to sales, the HSS segment contributes 85% of profits. It is Asia’s largest operator in the HSS segment – its UL and CEN certified products are valued in Europe (60% of sales) and the Americas (25%) – but not so much in its home base of China (4%) where it doesn’t intend to compete with lower-priced offerings. This segment, however, faces long-term headwinds due to the increasing use of cashless transactions resulting in lower demand for ATM safes. In addition, the industry faces rising raw material and labor costs. Moreover, the US-China trade spat resulted in higher costs with the use of t...