A Nanocap Trading at 5x Earnings While Buying Back Stock
Global Testing Corporation Limited - $AYN.SI
Market Cap - $34.4 million
AYN is a Singaporean nanocap that trades at 4.8x earnings, has bought back stock, and has an incredibly strong balance sheet.
Global Testing Corporation as the name suggests provides semiconductor testing services.
They mainly provide two services: wafer sorting and final testing.
Wafer sorting is an early test performed when chips are still on silicon wafers, which hold thousands of chips. AYN tests these chips and sorts them by performance and quality. Final testing is done after the chip is packaged into its final form and again tests to ensure the chips are working properly.
While it’s a Singaporean company their operations are in Hsinchu, Taiwan. Their customer base is mainly in Taiwan and Japan as combined they make up 77% of the revenue followed by Singapore, Thailand, and the US.
Financials
Their revenue over the past few years has remained pretty much flat with revenue remaining between $38-$46 million.
While their margins fluctuate quite a bit from year to year they have remained profitable with their lowest operating margin being 8% in 2023.
AYN had a great H1 2025 as they reported revenue growth of 22% yoy from $18.4 million to $22.5 million with the gross margin also improving a lot to 24% from 16%. The revenue increase was due to more orders from Taiwan and the US but seemingly no new customers.
They have a fortress of a balance sheet as they have $21.6 million in cash and cash equivalents to just $11.6 million in total liabilities.
Buybacks and capital reduction
The company has done a few capital reductions in the past and in June they did another one. They distributed S$0.025 per share which was S$833,000 in total which was equivalent to a 2.6% yield based on the market cap at that time.
They have also been buying back stock and bought back 351,700 share this year. They’ve been buying back stock since 2021 and have lowered the total shares outstanding by 1.8 million shares which is about a 5% reduction in total shares outstanding.
So we have a consistently profitable business that trades at very low multiples while having a strong balance sheet and recently had an incredible half year report and has been consistently returning capital to shareholders.
So why is the company valued at 5x earnings?
Customer concentration - Likely the biggest concern is the companies customer concentration. In 2024 their top 3 made up 68% of the total revenue which is up from 50% in 2021 with the single biggest costumer being 35% of the revenue.
Capital intense business - Semiconductor testing is very capital intense as they need to continuously need to invest in new equipment. This eats up a lot of their cash form operations leaving the company with less cash than would seem from their net profit. Since 2021 they’ve produced $52.08 million in cash from operations (after removing changes in working capital) but during that time have spent $27.9 million on Capex.
Boring business/no growth - They’ve had basically no revenue growth over the past 5 years as revenue has fluctuated up and down. Despite operating within the semiconductor industry, the business does not command a valuation premium, as its testing activities are concentrated on legacy and mature chip designs rather than higher-growth areas such as AI.
Conclusion
While I like the buy backs and the cash pile I don’t love the business. The recent revenue growth in H1 is definitely interesting and I’ll keep AYN on my watchlist.