Latitude Tree FY15Q2 Financial Result
| LATITUD | FY15Q2 | FY15Q1 | FY14Q4 | FY14Q3 | FY14Q2 |
| Revenue | 189.1 | 175.7 | 142.8 | 146.8 | 184.4 |
| Gross Profit | 34.4 | 26.2 | 20.3 | 23.8 | 35.8 |
| Gross% | 18.2 | 14.9 | 14.2 | 16.2 | 19.4 |
| PBT | 29.5 | 18.5 | 10.3 | 14.8 | 26.0 |
| PBT% | 15.6 | 10.5 | 7.2 | 10.1 | 14.1 |
| PATAMI | 27.4 | 16.6 | 8.7 | 12.8 | 19.0 |
| MAS Rev | 32.1 | 27.7 | 23.4 | 32.3 | 31.6 |
| MAS PBT | 5.4 | 2.3 | -0.7 | 3.0 | 2.1 |
| VIET Rev | 149.4 | 141.0 | 114.4 | 108.1 | 147.7 |
| VIET PBT | 22.6 | 14.8 | 13.0 | 10.9 | 24.9 |
| THAI Rev | 5.6 | 5.8 | 5.0 | 6.4 | 5.1 |
| THAI PBT | 0.7 | 1.0 | -0.4 | -0.1 | -0.3 |
| Total Equity | 366.6 | 327.2 | 308.2 | 296.8 | 270.1 |
| Total Assets | 548.6 | 502.8 | 475.3 | 475.5 | 530.1 |
| Trade Receivables | 63.4 | 59.9 | 37.0 | 49.1 | 58.2 |
| Inventories | 103.9 | 97.4 | 93.5 | 90.7 | 95.4 |
| Cash | 151.3 | 124.0 | 123.1 | 109.0 | 147.4 |
| Total Liabilities | 181.0 | 173.1 | 167.9 | 179.3 | 205.5 |
| Trade Payables | 89.9 | 91.7 | 79.1 | 77.7 | 95.7 |
| ST Borrowings | 82.6 | 74.8 | 78.8 | 91.4 | 95.5 |
| LT Borrowings | 6.1 | 6.4 | 7.9 | 8.9 | 11.1 |
| Net Cash Flow | 15.9 | -1.6 | 26.5 | 11.5 | 48.2 |
| Operation | 22.2 | 6.1 | 81.2 | 55.5 | 42.2 |
| Investment | -7.5 | -2.7 | -37.6 | -34.0 | -4.1 |
| Financing | -2.2 | -6.1 | -18.5 | -5.8 | 5.0 |
| EPS | 28.19 | 17.13 | 8.93 | 13.12 | 19.52 |
| NAS | 3.77 | 3.37 | 3.17 | 3.05 | 2.78 |
| Net D/E Ratio | NC | NC | NC | NC | NC |
Compared YoY, Latitude's latest FY15Q2 revenue rises only 2.5%. However, its PATAMI surged 44% mainly due to full contribution from its Vietnam operation.
Compared to preceding quarter of FY15Q1, PATAMI jumps 65% due to more orders, stronger USD and better productivity.
PBT from Malaysia operation doubles QoQ/YoY but PBT from Vietnam operation falls slightly YoY perhaps due to higher minimum wage.
Profit margin remain comparable to corresponding quarter one year ago.
Overall, it is a good quarterly result that beats my expectation.
Balance sheet & cash flow remain strong with an increase in net cash position.
Latitude's first half FY15's PATAMI of RM44mil is already 80% of its FY14 whole year PATAMI of RM55mil.
As there is a significant seasonality in its earning in which Q3 & Q4 are relatively weaker, it is unwise to annualize the half-year figure to predict its full year FY15 result.
With USD expected to remain strong against MYR and further recovery of US economy, I guess that Latitude should be able to achieve RM70mil PATAMI for its FY15 which ends in June15.
With this figure, its guesstimated EPS will be 72sen, and target price RM5.76 given a PE ratio of 8x.
So, at current price of RM5.31, it is trading at projected PE of 7.4x.
I have never been to the US and I don't know how do US people feel about their country's economy. However, I know that my 2 cousins in US have just moved into their new houses last year.
Latitude's dividend payout is a problem to many of its investors. It paid 25% and only 15% for its FY13 & FY14 respectively.
I think it has no reason not to pay at least 25% in FY15.
As no analyst covers Latitude Tree at the moment, I am not sure what is the capacity utilization of its production facilities.
How nice if some investment bank starts to cover this stock soon and give it a forward PE ratio of 10x like Hevea!
To me Latitude's capacity utilization seems to be already on the high side on its peak season and further growth might be limited, unless its production picks up in low-peak season.
As its management prefers to hold more cash rather than paying out as dividends, perhaps they have plans to expand its business further through capacity expansion or acquisition?
Who knows if Latitude can surprise everyone by delivering a surprisingly good results in its traditionally weak Q3 & Q4?
Kevin Wong
hao xiang ..!
2015-02-15 08:42