KLCI Stock - HOMERIZ / 5160 - 2011 Quarter 4

Company Info

Market Capital (Capital Size)	60,000,000 (Very Small)
Par Value	RM 0.20

My Analysis

Forecast P/E now	(0.3-0.0225)/0.0784 = 3.54 (Moderate)
Target Price	0.47+0.0225 = 0.49 (PE 6.0, EPS 0.0784, DPS 0.0225)
Decision	BUY if stock price next uptrend start above 0.28
Comment	Revenue increased 28.2% and was second consecutive quarter increasing and also higher than preceding year corresponding quarter 21.3%, eps increased 122.7% and was second consecutive quarter increasing but still lower than preceding year corresponding quarter 5.3%, cash generated from operating enough for financing expenses but spent 40.2% to cover investing expenses , weaker liquidity ratio from strong to high level now, higher gearing ratio at below moderate level now, higher inventory can indicate better demand of products, benefit from strengthening of USD against RM
First Support Price	0.265
Second Support Price	0.23
Risk Rating	MODERATE

Accounting Ratio

Return on Equity	16.64%
Dividend Yield	7.50%
Profit Margin	17.57%
Tax Rate	7.84%
Asset Turnover	1.0845
Net Asset Value Per Share	0.31
Net Tangible Asset per share	0.31
Price/Net Tangible Asset Per Share	0.81
Cash Per Share	0.06
Liquidity Current Ratio	3.6885
Liquidity Quick Ratio	1.6491
Liquidity Cash Ratio	0.9423
Gearing Debt to Equity Ratio	0.2837
Gearing Debt to Asset Ratio	0.2154
Working capital per thousand Ringgit sale	37.2%
Days to sell the inventory	118
Days to collect the receivables	34
Days to pay the payables	44

My notes based on 2011 quarter 4 report (number in '000):-
- Higher revenue attributed to the increase of demand from customers and increase of the certain product pricing

- During Q42011, the Group has diversified into manufacturing of metal frames for upholstered dining chairs by acquiring of EISB. As a result, the Group enjoys cost saving from production of metal frames which was previously purchase them externally

- 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 Q4 result announced = 0.0196*4 = 0.0784, estimate PE on current price 0.3 = 3.54(DPS 0.02)
- Estimate next 4Q eps after 2011 Q3 result announced = 0.0088*4*1.05 = 0.037, estimate highest/lowest PE = 7.57/4.86 (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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