KLCI Stock - HOMERIZ / 5160 - 2011 Quarter 3

Company Info

Market Capital (Capital Size)	53,000,000 (Very Small)
Par Value	RM 0.20

My Analysis

Forecast P/E now	(0.265-0.0060)/0.037 = 7.00 (High)
Target Price	0.22+0.0060 = 0.23 (PE 6.0, EPS 0.037, DPS 0.0060)
Decision	Not interested unless revenue, profit and USD dollar increase more
Comment	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 Price	0.265
Second Support Price	0.23
Risk Rating	HIGH

Accounting Ratio

Return on Equity	18.69%
Dividend Yield	10.19%
Profit Margin	9.48%
Tax Rate	7.87%
Asset Turnover	1.1715
Net Asset Value Per Share	0.3
Net Tangible Asset per share	0.3
Price/Net Tangible Asset Per Share	0.88
Cash Per Share	0.05
Liquidity Current Ratio	4.2825
Liquidity Quick Ratio	2.0418
Liquidity Cash Ratio	1.0331
Gearing Debt to Equity Ratio	0.2468
Gearing Debt to Asset Ratio	0.198
Working capital per thousand Ringgit sale	35.3%
Days to sell the inventory	102
Days to collect the receivables	37
Days to pay the payables	39

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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