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Tuesday, July 26, 2011

KLCI Stock - HOMERIZ / 5160 - 2011 Quarter 3

Company Info
Market Capital (Capital Size)53,000,000 (Very Small)
Par ValueRM 0.20

My Analysis
Forecast P/E now(0.265-0.0060)/0.037 = 7.00 (High)
Target Price0.22+0.0060 = 0.23 (PE 6.0, EPS 0.037, DPS 0.0060)
DecisionNot interested unless revenue, profit and USD dollar increase more
Revenue increased 3.2% but lower than preceding year corresponding quarter 21.3%, eps increased 3.5% but lower than preceding year corresponding quarter 63.6%, cash generated from operating is not enough to cover all expenses, stronger liquidity ratio at strong level now, lower gearing ratio at below moderate level now, all accounting ratio are good except inventory got slightly high, affecting by weakeaning USD dollar against Ringgit
First Support Price0.265
Second Support Price0.23
Risk RatingHIGH

Accounting Ratio
Return on Equity18.69%
Dividend Yield10.19%
Profit Margin9.48%
Tax Rate7.87%
Asset Turnover1.1715
Net Asset Value Per Share0.3
Net Tangible Asset per share0.3
Price/Net Tangible Asset Per Share0.88
Cash Per Share0.05
Liquidity Current Ratio4.2825
Liquidity Quick Ratio2.0418
Liquidity Cash Ratio1.0331
Gearing Debt to Equity Ratio0.2468
Gearing Debt to Asset Ratio0.198
Working capital per thousand Ringgit sale35.3%
Days to sell the inventory102
Days to collect the receivables37
Days to pay the payables39

My notes based on 2011 quarter 3 report (number in '000):-
- Lower revenue mainly due to lower sales volume and the continued weakening of the US dollar

- Lower pbt mainly attributed by lower revenue generated in current quarter, the continued weakening of the US dollar coupled with the time lag in passing on the higher costs to its customers. Beside this, there are additional expenses of about RM0.2 million incurred in Q32011 for first time participate in International Furniture Fair Singapore 2011

- The average US dollar against Ringgit weakened by 7.1%, (from RM3.27 in Q32010 to RM3.02 in Q32011) during the quarter under review compared with the previous corresponding quarter

- In FY2010, revenue recorded RM110 million and profit RM21.7 million
- In FY2009, revenue recorded RM108.4 million and profit RM22.7 million
- In FY2008, revenue recorded RM92.6 million and profit RM12.4 million
- In FY2007, revenue recorded RM73.8 million and profit RM10.5 million

- Revenue regions percentage: Europe-60%, Australasia-26%, North & South America-8%, Others-6%

- Revenue products percentage: Upholstered Sofas-55%, Upholstered Dining Chairs-30%, Upholstered Bed Frames-13%, Others-2%

- Dividend policy envisage not less than 40% of net profit, intends to recommend and distribute at least 50% of net profits

- Estimate next 4Q eps after 2011 Q3 result announced = 0.0088*4*1.05 = 0.037, estimate PE on current price 0.265 = 7(DPS 0.02)
- Estimate next 4Q eps after 2011 Q2 result announced = (0.0172+0.0085)*2 = 0.0514, estimate highest/lowest PE = 7.2/4.67 (DPS 0.02)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.0172*4*1.05 = 0.0722(revenue incrreased, improved balance sheet), estimate highest/lowest PE = 6.09/4.57 (DPS 0.04)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.0207*4 = 0.0828, estimate highest/lowest PE = 7/4.29 (DPS 0.04)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0242*4*0.95 = 0.092, estimate highest/lowest PE = 6.47/4.35 (DPS 0.04)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.0268*4*0.95 = 0.1018, estimate highest/lowest PE = 6.04/4.91 (DPS 0.04)

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