Spindex Industries, a precision machines components manufacturer and assembly solutions provider, has reported earnings of $9.6 million for the 1HFY2021 ended December, 53.1% higher than earnings of $6.3 million the year before.

Spindex was highlighted as one of The Edge Singapore’s stocks to watch in Issue 970 for its attractive valuations.

Earnings per share (EPS) for the 1HFY2021 stood at 8.31 cents on a fully diluted basis, compared to EPS of 5.43 cents the year before.

Turnover for the six months ended December grew 22.5% y-o-y to $98.9 million, due to higher demand for the group’s products amid the Covid-19 pandemic.

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“In some cases, working from home requires new or additional office equipment at home. Time spent on new hobbies at home and work around the house have contributed to additional demand for some domestic appliances,” says the company in a Feb 10 statement.

Some backlog of orders, changes in the global supply chain and forward stocking in anticipation of supply chain disruptions also contributed to the growth.

The growth in the group’s turnover was broad based across all business sectors.

The higher turnover contributed to a 47.1% y-o-y increase in gross profit to $24.1 million.

Gross profit margin (GPM) grew 4.1 percentage points to 24.4% in 1HFY2021, contributed by a lower material price environment during the early part of the pandemic of lower forecasted demand.

The higher GPM was also due to the effect of scale with higher turnover and product mix in the latter part of the period.

Other operating income surged 76.2% y-o-y to $1.7 million due to government support grant received and higher scrap income.

Administrative expenses rose 50% y-o-y to $11.6 million mainly due to a foreign exchange reversal from a weaker US dollar against the Asian currencies.

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For the 1HFY2021, the group’s profitable operations generated a net cash inflow of $6 million. Proceeds from bank borrowings amounted to $5 million. The two main cash outflow items under investing and financing activities were purchase of property, plant and equipment and payment of dividends totalling $13.3 million.

Due to the higher cash outflows, cash and cash equivalents as at Dec 31, 2020, decreased from $51.2 million to $47.7 million.

The group says the containment of the Covid-19 virus as vaccines are being rolled out and its consequential impact may not necessarily be co-related with regard to the group’s business.

“In view of such uncertainty, the near term market conditions are likely to remain volatile,” it says.

“Furthermore, countries that the group operates in are also subject to varying measures of control, such as lockdowns, which may impact its operations.”

“With a strong balance sheet, the group has invested prudently in plant and machinery in an optimal network across Asia,” it adds.

Shares in Spindex closed flat at 98 cents on Feb 10.