Executives forgoing bonus for stock incentives, says volumne on their bullishness on stock performance.
The improvement of the Company's results in the third quarter of 2012 was mainly due to six factors. First, sales increased significantly by 198.0% compared to the same period last year, as a result of (i) the Company's Wuxi manufacturing facility continued to ramp up of its production of high-resolution liquid crystal display modules ("LCMs") for tablets and (ii) the Company's Shenzhen manufacturing facility began mass production of high-resolution LCMs for smartphones in September 2012. Second, the management of the Company adopted certain employee stock option arrangement and forfeited a cash incentive bonus of $5.1 million. Third, the Company had $2.0 million in other and interest income, including $0.6 million of incentive allowance from the PRC government for the manufacturing of mechanical and electrical products, $0.9 million of interest income and $0.5 million of exchange gain. Fourth, the Company has improved its gross and net profit by discontinuing certain sales orders that have had poor performance. Fifth, the Company enjoyed benefit from the certain exemption treatment and tax reduction for its Wuxi operation and a tax benefit of $1.1 million as a result of tax losses carried forward from last year. Lastly, the Company has also been successful in its cost control management which effectively maintaining expenses at a similar level as before even though it had a significant increase in sales.
If you read the company's filings last year you will see that as a foreign issuer they are exempt from a number of reporting requirements relating to insider ownership, etc. The adoption of a stock option plan was the final straw that triggered my increased investment in this stock. I have been well rewarded, have taken over 50K in profits and still hold 20K shares. The reports on reduction in screen orders by Apple from Japan Display and Sharp caused me to take the profits, however I now believe this may be related to changing over to new specs for improved quality screens mentioned here some time ago and controlled by Sharp. I expect another sharp run up in the share price because the quarter will be good and the price has been dropped significantly over recent months. The caveat is Q1 guidance and the question is do you hold if it indicates a temporary slow down in orders?
"The caveat is Q1 guidance and the question is do you hold if it indicates a temporary slow down in orders?"
I think you answered your own question in your comments that preceded the question. For all but those with the shortest term investment strategies, Nam Tai is definitely a buy because of how well the company has been positioned and it's strong balance sheet. Management foresight
during the economic downturn is now paying off and the rewards are only just beginning.
Hopefully my strong confidence in the company won't be betrayed by tomorrow's call and I won't be eating these words!