KLCI Stock - HOMERIZ / 5160 - 2010 Quarter 3

Market Cap : 200000000*0.445 = 89,000,000 (Very Small)
NTA per share : 53107/200000 = 0.27
P/BV : 0.445/0.27 = 1.6481
Forecast P/E now : (0.445-0.04)/0.092 = 4.4
ROE : 29.97% (3 quarter only)
DY : 0.04/0.445*100 = 8.99% (High)
Fixed Asset Turnover(3 year) : Not available
Liquidity Ratio : 41785/10756 = 3.8848 (High)
Receivables Collection Period : Not available
My Target Price : Not interested unless revenue and profit increase more
My Decision : NOT BUY
My Comment : Revenue and profit decreasing, acceptable cash flow, below moderate debt and decreasing, navps same, inventory increased but receivables decreasing, weakening USD, new manufacturing factory in Vietnam will begin operations by the second half of this year, still poor economic in Europe
Technical Support Price : 0.44
Risk Rating : HIGH

My notes based on 2010 quarter 3 report (number in '000):-

- The Group revenue for the current quarter under review decreased by 14.4% from preceding quarter. The Group profit before tax decrease by 8.9% as compared to the preceding quarter. The Group’s lower profit in the current quarter under review was mainly due to lower revenue

- The decrease in revenue was mainly due to the lower customer order received as a result of higher ocean freight rates and the weakening of euro against US dollar. The weakening of euro was brought about by the economic uncertainties in Europe arising from the recent economic crisis

- Nevertheless, the Group managed to sustain its profitability in the quarter under review due to tighter cost control measures and lower of administrative and selling and distribution expenses during the quarter under review. This was evidenced by the lower rate of decline in profit before tax (8.9%) as compared to the 14.4% drop in sales

- 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 2010 Q3 result announced = 0.0242*4*0.95 = 0.092, estimate PE on current price 0.445 = 4.4(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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