Stock Focus : Creative Technology

 

   Cash burn has slowed in the past year as indicated by the lower right-hand chart above while revenue has picked up somewhat in the last 2 years despite the increasing obsolescence of its namesake sound blaster products.

   Losses have narrowed such that EPS has improved from (27c) to (15c) in the last 3 years, yet total assets have almost halved to $64.5 million in the last 4 years, while its current assets have more than halved to $52.5 million, accompanied by a 65% reduction in cash holdings to $29.84 million. However, Grahamian net-net is still 41.3 cents [ 53.3 S'pore cents at 1.29 to the US$ ] albeit down from $1.065 in '21: ergo, it trades at a 19% premium to that liquidation value, compared to a 61% premium in '21. Debt has contracted 74% to just under $1 million since 2021.

   The estate of the late founder Mr. Sim, who passed away in January 2023, holds a substantial stake of a tad over 31%, or 23.27 million shares, while 6% or 4.603 million shares are treasury shares. 

   The stock goes through a price explosion every 3-8 years, the previous occasions being 1997, 2000, 2004, 2009, 2012, 2018, 2020 & 2023. After its June 1994 dual NASDAQ-SES IPO at S$25.80, it rose over S$32 briefly before plunging to S$4.98 in 1996 & then soaring to over S$70 the next year, dropping 2/3 & then re-attaining its old peak again during the dot.com bubble which will remain its all-time high likely for all eternity!

   Possible catalysts for the next rocketing include a diversification into sound hardware applications for AI, a sale of valuable patents, a takeover of a cheap NASDAQ listing by another high technology entity or perhaps an old-fashioned ramp to allow the surviving beneficiaries of Sim to cash out!

    I was last involved from 2015-2018 when I bought some at S$1.76 & averaged down at just over S$1.05 in early 2017, but unfortunately sold too early above S$2.00 in the early stages of its 2018 rocketing to S$10, earning about M$1,000 in the process.

   The bullish candlesticks & low volume pullbacks of late [ see below ] look promising for an early 2026 rocketing! Look for continued base-building & volume dry-ups during pullbacks and a higher high by early next year for confirmation of exciting action to come within 3 - 6 months. First target is 99c, followed by S$1.11-1.20 & then perhaps a re-test of $2.00.