The Tweedy Browne (Trades, Portfolio) Global Value Fund purchased a 365,000-share stake in Thinking Electronic Industrial (TPE:2428) at an average price of 49.8 new Taiwan dollars ($1.59 in U.S. currency) in the second quarter.
Thinking Electronic Industrial was originally founded in 1979 and is currently headquartered in Kaohsiung, Taiwan. The company creates and distributes circuit components that provide protection against using too much voltage, over temperature and overcurrent protection. The company’s products include NTC and PTC thermistor, zinc oxide varistors and gas discharge tubes among others.
Thinking Electronic Industrial has a market cap of 6.59 billion new Taiwan dollars, an enterprise value of 5.64 billion new Taiwan dollars, a price-earnings (P/E) ratio of 9.21 and a price-book (P/B) ratio of 1.56.
According to GuruFocus Thinking Electronic Industrial has an 8 of 10 financial rating with a Piotroski F-Score of 7, indicating that the company is in a very healthy situation. The company also has a 4.60 cash-to-debt ratio which ranks it above 65% of the 2,250 companies in the global electronic components industry. The company also has an 8 of 10 profitability and growth rating with an operating margin of 17.86% ranking it above 92% of the companies in its industry.
The Tweedy Browne (Trades, Portfolio) Global Value Fund may have bought the stake for the following reasons:
- The company has 37 years of operating experience in the global electronic components industry.
- Company shares are worth 63.46 new Taiwan dollars according to the DCF calculator which provides a 12.86% margin of safety for the Tweedy Browne (Trades, Portfolio) Global Value Fund.
- The company has a Graham number of 68.38 new Taiwan dollars. The number measures the stock’s fundamental value by taking into account the company’s earnings per share and book value per share.
- The company has been gaining momentum and has been rapidly improving its financial results over the previous trailing 12 months. Its reported operating income growth was 22.70%, free cash flow growth was 22.20%, EPS without NRI growth 20.50%, and its EBITDA growth was reported to be 20.50% over the previous trailing 12 months.
- The company has a Beneish M-Score of -2.65 indicating that it is not manipulating its financial statements.
Below is a Peter Lynch chart below that shows that Thinking Electronic Industrial is trading below its intrinsic value.
Cheers to your investment success.
Disclosure: Author does not own any shares of this company.
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