Posted by Intelligent Investor > 2014-06-26 15:36 | Report Abuse

HOMERITZ ROE and ROCE is 60% and 51% respectively and this is a very high number. Do check why it drop to 42.85 and 31.98 on year 2010 and further drop to 21.85 and 16.46 on year 2013. Do a DuPont analysis to check out where the number come from. And, check out who is the culprit.

For EPS and FCF per share, I think there is no point to compare both of them as they have different NOSH. I prefer to compare Net Profit or FCF as a whole, or alternately we can compare P/E or P/FCF to check which company is a cheaper buy. In my view, I prefer the EV\EBIT instead.

You can refer to my writeup on http://intelligentinvestor8.blogspot.com/2014/06/financial-statement-analysts-template.html

Posted by Intelligent Investor > 2014-06-26 17:26 | Report Abuse

Hi GenghisHoe, I just comments based on screwdriver's calculation. I was suprised by the 60% ROE.

Posted by GenghisHoe > 2014-06-26 17:41 | Report Abuse

"HOMERITZ ROE and ROCE is 60% and 51% respectively and this is a very high number. Do check why it drop to 42.85 and 31.98 on year 2010 and further drop to 21.85 and 16.46 on year 2013. Do a DuPont analysis to check out where the number come from. And, check out who is the culprit."

Good point! Previously, its ROE was so high as it was highly geared.

screwdriver, first of all you gotta define what kinda businesses that both companies run. Hevea is involved in wood-related furniture products but Homeritz is primarily engaged in upholstered furniture products and mainly in the export market. They're actually different business models, although they're in the same industry/sector. So better don't compare it like this.

As for the manufacturing business, you've to keep an eye on the cash conversion cycle (DIO + DSO - DPO), CAPEX, staff costs, gearing and margins.

Give me your email, I send you a book to learn financial ratios. You must make sure that you gotta finish reading up it and directly apply.

Note: NOSH = Number of shareholding, in case that you do not understand Intelligent Investor's word.

Posted by GenghisHoe > 2014-06-26 18:12 | Report Abuse

Intelligent Investor, I interpreted your message wrongly. Yup 2009's ROE one was damn high due to the component of the leverage (from DuPont analysis).

It's good to use DuPont ROE to find the culprit as you mentioned.

For your information, basically 1st year of listing those ratios are weird if you notice on it.

Anyway, I see you share a lot of your hardwork through i3 if possible, we can exchange knowledge and information to stick with the principles of being a fundamentalist.

Posted by screwdriver > 2014-06-26 18:12 | Report Abuse

The ROE I obtained it directly from bursamarketplace, I think they are using average equity in their calculation.
Thanks for highlighting their differences in businesses and the drop of ROE.

Intelligent, in your view, are P/E and P/FCF the most suitable metrics to compare their prices?
Since if one is having better valuation and it has better growth prospect, people may consider to pay more, hence giving them a higher P/E and P/FCF.
This is what had puzzled me all this while.

GenghisHoe, thanks for showing me cash conversion cycle, and other aspects for comparison, does the book u recommends include them? My email is screwdriver168@gmail.com, thank you very very much.

Posted by GenghisHoe > 2014-06-26 18:26 | Report Abuse

Every ratio's formula, you need to keep in mind and do not try to go shortcut because that if you're unable to master the ratios properly then you will interpret wrongly as the ratios could be manipulated easily. If you directly plug from those websites provided, then how can you 'feel' the overall company's operations?

I've emailed to you, please check it out.

Posted by Intelligent Investor > 2014-06-26 18:39 | Report Abuse

Hi screwdriver,

If you want to perform valuation from the future, give DCF a try - http://intelligentinvestor8.blogspot.com/2014/06/discounted-cash-flow-dcf-analysis-excel.html

Posted by stanleysee > 2014-06-26 19:01 | Report Abuse

GenghisHoe, would you mind to send me the book to my email as well?
My email is seng0111@gmail.com, appreciate it. Thanks =)

Posted by GenghisHoe > 2014-06-26 19:23 | Report Abuse

stanleysee, I've sent please confirm receipt. Thanks.

Posted by ChiengLing > 2014-07-02 02:43 | Report Abuse

Hi GenghisHoe, would you mind send to me too?
Email: sharestock888@gmail.com

Posted by Deslim Lim > 2014-07-03 23:19 | Report Abuse

Hi GengHisHoe, would you mind to send to me as well?
Email: deslim91@hotmail.com

Thanks!!

Posted by Tan Cheng Leong > 2014-09-11 20:37 | Report Abuse

Hi GenghisHoe, would you mind send to me too?
Email: chengleong88@hotmail.com

Posted by cjiejack > 2014-09-27 17:46 | Report Abuse

hi GengHisHoe, i'm appreciate if you could offer me the chance to learn the skills by sending me the book as well. Thank you.
email: cjiejack@gmail.com

Posted by Carson Teor > 2014-10-01 10:33 | Report Abuse

hi GengHisHoe, i'm appreciate if you could sending me the book as well. Thank you.
email: csteor@gmail.com

Posted by yklip > 2014-10-13 21:34 | Report Abuse

Hi GenghisHoe, appreciate if you can send me (yklip@hotmail.com) the book regarding financial ratios. Thanks!

Posted by Job Liew Chee Fool > 2014-10-28 12:19 | Report Abuse

Hi GenghisHoe, appreciate if you can send me, jobliew@gmail.com the book regarding financial ratios. Thanks!

Posted by clloh85 > 2014-12-26 22:58 | Report Abuse

Hi GenghisHoe, appreciate if you can send me, clloh85@gmail.com the book regarding financial ratios. Thanks!

Posted by calvintaneng > 2014-12-26 23:04 | Report Abuse

H Versus H Furniture?

Just Buy Both Lah!

H Stands for high or higher

So Higher Versus Higher?