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Hevea: From Debt-Ridden To Net Cash - Bursa Dummy

Tan KW
Publish date: Sat, 21 Nov 2015, 01:45 PM
Tan KW
0 496,096
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Saturday, 21 November 2015 

 
Heveaboard FY15Q3 Financial Result
 
HEVEA FY15Q3 FY15Q2 FY15Q1 FY14Q4 FY14Q3
Revenue 123.8 111.4 116.4 115.1 95.7
Gross Profit 30.5 23.0 22.0 20.0 13.8
Gross% 24.6 20.6 18.9 17.4 14.4
PBT 21.4 16.5 14.6 9.0 6.3
PBT% 17.3 14.8 12.5 7.8 6.6
PATAMI 18.1 16.0 14.0 8.9 5.8
           
PB Manu Rev 59.9 51.3 47.6 51.1 46.4
PB Manu PBT 11.0 10.9 7.6 1.6 4.1
RTA Manu Rev 59.9 56.5 64.4 59.7 44.5
RTA Manu PBT 10.2 5.6 6.7 7.5 1.9
PB Trade Rev 0.5 0.2 0.2 0.2 0.02
PB Trade PBT 0.11 0.02 0.1 0.05 0.04
RTA Trade Rev 3.5 3.4 4.3 4.1 4.7
RTA Trade PBT 0.03 0.02 0.1 -0.08 0.2
           
Total Equity 320.8 301.1 284.7 270.7 261.8
Total Assets 441.6 416.8 412.7 412.5 414.5
Trade Receivables 47.7 52.3 44.7 53.5 49.2
Inventories 57.9 62.7 64.5 60.7 62.2
Cash-OD 74.9 48.3 44.6 35.6 35.3
           
Total Liabilities 120.7 115.6 128.0 141.9 152.7
Trade Payables 25.9 26.3 26.7 27.4 37.9
ST Borrowings 32.4 29.7 25.0 27.4 23.2
LT Borrowings 29.8 32.6 44.0 41.7 64.6
           
Net Cash Flow 39.3 12.7 8.9 8.1 7.8
Operation 84.7 44.5 27.0 50.4 36.6
PPE Depreciation 19.4 12.9 6.4 26.1 19.6
Investment -8.9 -2.3 -3.5 -10.7 -6.3
PPE purchase 8.8 2.3 3.5 10.7 6.3
Financing -36.6 -29.4 -14.6 -31.6 -22.4
FCF 75.9 42.2 23.5 39.7 30.3
           
Dividend paid 4.0 1.5 0.0 1.9 1.9
           
EPS 4.63 15.82 14.05 8.96 5.85
NAS 0.82 2.97 2.86 2.72 2.63
Net D/E Ratio Net cash 0.05 0.09 0.12 0.20
 
 
Hevea's remarkable rise continues with its best ever quarterly result in FY15Q3.
 
Its revenue and PATAMI of FY15Q3 increase 11% and 13% respectively compared QoQ.
 
This better result is contributed by improvement in both of its particleboard & Ready-To-Assemble (RTA) products manufacturing.
 
Hevea has gradually shifted its particleboard product range from conventional to higher value low-emission eco-friendly products which serve higher-tier customers.
 
This has resulted in higher revenue and profit margin for the company.
 
It has also invested heavily on automation in its RTA products manufacturing to improve operation efficiency.
 
This might have started to reap the reward as we can see a jump in the PBT margin in this segment in current quarter.
 
 
 
Hevea's cost are mainly in MYR and about 90% of its sales are denominated in USD. So it should benefit from stronger USD against MYR.
 
However, it actually registered a net forex loss of RM1.56mil in this quarter due to USD denominated loan.
 
Its cash flow remain robust anyway and so its balance sheet strengthens further.
 
It finally turns into a net cash company before year 2016.
 
As a result, it continues to pay second interim dividend of 0.5sen for FY15, after a first interim dividend of 0.5sen being paid after the share split.
 
Though the total 1sen dividend so far is merely 13% payout from 1H15's PATAMI, I believe that higher dividend or may be a special dividend will be paid next year.
 
I also believe that Hevea will be another company that pays quarterly dividend.
 
I guess Hevea should be able to achieve RM65mil in PATAMI for its FY15.
 
Base on current outstanding shares of 424mil, projected EPS will be 15.3sen.
 
Fully diluted (144mil warrants expired in 2020) projected EPS for FY15 will be lower at 11.4sen.
 
Hevea does not have a fixed dividend policy yet I think.
 
If it decides to pay 30% as dividend, then it will be 4.5sen for FY15, with a possible yield of around 3% at current share price of RM1.47.
 
 
 
Can Hevea continue to grow?
 
There are rumour that it is looking to acquire SHH Resource which is a solid wood furniture manufacturer.
 
I don't know what will be the outcome but it's clear that Hevea's management is trying to grow the company inorganically. 
 
It will also venture into the retail furniture market by producing and selling eco-friendly (low formaldehyde emission) children furniture.
 
This new product is expected to be available in local Malaysia market by 2015 year end before exported to regional markets.
 
I expect MYR to stay flat or rebound against USD in 2016.
 
If it stays flat, it should benefit Hevea as USD loan will be pared down in stages.
 
If it rebound modestly, I think it should not affect Hevea too much as it is still losing on strong USD now.
 
Anyway, I think Hevea has a good future so I will continue to hold its shares even though only a little.
 
 

 

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3 people like this. Showing 12 of 12 comments

soojinhou

Ugly duckling to pretty swan.

2015-11-21 20:24

Probability

ya...catch it before it flies...;)

2015-11-21 20:36

RosmahMansur

One of the most expensive furniture stocks in Bursa

2015-11-21 22:49

BearbearDrop

What about evergreen?
Which is more expensive?

2015-11-22 19:02

Kevin Wong

higher valuation than most...for good reason??...time will tell

2015-11-22 19:37

rosmahmansur

Evergreen > Hevea > Mieco

2015-11-22 20:11

hyteo1992

hevea has higher ROE, lower current ratio, lower total debt-to-asset ratio. which means hevea earn more than evergreen while it is safer in their debt risk. Thr is a reason for hevea become more expensive. Because it is better.

2015-11-22 20:14

hyteo1992

In my opinion, the only one better than hevea now is latitud. However its stock price is too high even though P/E is lowest.

2015-11-22 20:17

rosmahmansur

Latitude and Hevea are doing different business....Latitude is of furniture based while hevea is fibreboard....

fibre board only mieco / everygreen/ mieco

2015-11-22 20:18

Hotrod

Hevea's earnings already peak. Evergreen still has room for growth. Mieco's earnings not consistent and they don't focus solely on fibreboard.

Hence, Evergreen is the top pick now.

2015-11-22 21:00

hyteo1992

How to know whether the earning already peak?

2015-11-22 21:13

kennethcheah

Evergreen 这只股@pure stock,
还没发生过share split/Bonus Issue.....
甚至集团还作10Private Placement.
But, Now is on the way.

TP rm3.08 setted by CIMB before the
Last Day of Share Price@Bonus Issue.

(最好是还没发生share split/bonus issue前
先买入,要不然就得付出更多钱来拥有它的units)

看看Liihen, VS, Hevea, Pohuat, Magni, Karex,
等等您就会晓得。

2015-12-03 18:11

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