The Macao Manufacturing Maverick

October 11, 2025

Presenting another Deep Value Lens net-net company - 80% of net-net

Deswell Industries, Inc.

Balance Sheet

Let's take a look at its financial balance sheet as of March 31, 2025

Asset / Liabilities	USD
cash	50.3 million
accounts receivable	9.9 million
inventory	9.5 million
less: total liabilities	18.1 million
net-net	76.8 million

leaves a Deep Value Lens net-net value of 76.8 million USD or 4.81 USD per share. Trading at 3.82 USD per share.

Income Statement

Revenues for Deswell Industries climbed for many years until 2022 peaking at 86 million USD. They’ve fallen since and were 67 million USD in fiscal 2025. Gross margins average just over 18% and operating margins average 4.6% producing a return on assets employed of about 6% - an overall, consistently profitable business, albeit declining. The business has paid dividends for nearly ten years and most recently 0.20 USD per share per year.

Market Value

Description	USD	% of Net-Net
Deep Value Lens net-net	76.8 million
Today’s Market Value	60.9 million	80

Narrative

Folks, let me tell you about Deswell Industries, Inc., ticker symbol DSWL on the Nasdaq. This outfit's been around longer than some of my classic cars, and just like a well-tuned engine, it's all about precision and reliability in the manufacturing game.

Picture this: It's 1987, and Asia's industrial scene is revving up like a drag race. Three savvy entrepreneurs—Richard Lau, Chin Pang Li, and Franki S.F. Leung—spot an opportunity in the exploding demand for outsourced production. They launch the company in Macao, originally as Jetcrown Industrial, aiming to fill the void for dependable original equipment manufacturing. Lau handled the big-picture leadership until his retirement, Li oversaw the nuts-and-bolts operations in manufacturing and admin, and Leung charted the strategic course. Their goal? To crank out top-tier components without the headaches of in-house production for global brands, capitalizing on low costs and high expertise in a region poised for growth.

Now, what do they actually make? Deswell specializes in injection-molded plastic parts—think everything from flashlight casings and printer components to medical apparatus for blood tests and snazzy laser key caps. They don't stop there; they've got electronic wizardry like printed circuit board assemblies using surface mount tech, plus full subassemblies for audio gear such as digital mixers, amplifiers, and speaker enclosures. On the metallic side, they produce precision sheet metal products and toolings for complex gadgets. Services-wise, it's a one-stop shop: design support, prototyping, assembly, and even helping clients navigate the product lifecycle from concept to shelf. It's like being the pit crew for inventors who hate getting their hands dirty.

Their customer base reads like a who's who of tech and tunes. Big players in consumer electronics, industrial tools, and healthcare rely on them—names in audio entertainment, power tools, and medical devices outsource the heavy lifting so they can focus on innovation. Deswell ships to spots across China, the US, Europe, Hong Kong, the UK, and Canada, keeping those supply chains humming without a sputter.

Of course, they've got rivals gunning for the same turf. Think outfits like Benchmark Electronics, Celestica, and AMETEK, who also dabble in electronics assembly and custom molding. Then there's Neonode, RF Industries, and Netlist in the component space, or even Highway Holdings and China Yuchai for broader manufacturing plays. It's a competitive track, but Deswell holds its lane with a focus on quality and that Macao edge.

Lately, things are looking up for these guys. In fiscal 2025, earnings per share climbed to 70 cents from 48 the year before, thanks to solid revenue around 68 million bucks. The stock's been on a tear, crossing above its 200-day moving average and hitting around 3.95 bucks a share, with a juicy 20-cent dividend payout. They've reaffirmed a "Buy" rating from analysts, filed their annual 20-F report, and even scheduled a shareholder confab for November 2025 in Dongguan. Short interest has fluctuated, but overall, it's like the company's shifted into overdrive amid recovering global demand.

As for artificial intelligence shaking things up? AI could supercharge Deswell's operations big time. In plastic injection molding, algorithms might predict defects like warping before they happen, optimizing machine settings in real-time to slash scrap and downtime. For electronics assembly, AI-driven image recognition could spot flaws on the line faster than a hawk, boosting quality control and efficiency. It might even aid in sustainable designs, cutting energy use and waste—turning this traditional manufacturer into a smarter, greener beast without needing a full overhaul.

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Learn more at Deswell Industries, Inc.

Location: 10B, Edificio Associacao Industrial De Macau, 32 Rua do Comandante Mata e Oliveria, Macao Special Administrative Region, PRC

Traded on Nasdaq. Symbol DSWL.

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	DVL Q2 2025 Net-Net Goldmine Report.pdf2.66 MB • PDF File

Index	6.30.25 to 7.31.25	6.30.25 to 8.31.25	6.30.25 to 9.30.25
DVL Q2 Net-Net Goldmine	8.4%	8.7%	18.5%
S&P 500	2.2%	4.1%	7.7%
MSCI ACWI	1.1%	3.8%	7.5%

	DVL Q2 2025 30 60 90 Day Returns Published.pdf286.49 KB • PDF File

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The Macao Manufacturing Maverick

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