Posted by probability > 2016-05-20 23:45 | Report Abuse

very interesting Ricky...good to have analytical minds like you in i3.

Posted by SuperMan 99 > 2016-05-21 00:02 | Report Abuse

Best of all, thank you & great work, Ricky.

Posted by SuperMan 99 > 2016-05-21 00:05 | Report Abuse

This is best:

The true value of a stock does not change much from year to year. That is also the case for this industry.

Dig into the business to understand what drives the numbers and how those numbers drives valuation. When the market sentiment is awash with currency horror & excitement, understand how the business is creating value is the only thing you can anchor on. What really matters in the end is how the business adds value, not what the conversion rate is.

Posted by stockmanmy > 2016-05-21 00:08 | Report Abuse

There is no true value.

It's always relative and always moody.

Posted by imnew > 2016-05-21 00:34 | Report Abuse

nice and detailed review of the furniture listing company, good job

Posted by SuperMan 99 > 2016-05-21 01:32 | Report Abuse

Ricky, if your article can come out few days early, then it would be even better to me :)

Posted by alex88812 > 2016-05-21 14:01 | Report Abuse

Based on the analysis above, homeriz seems to be on par/slightly better compared to the rest of the competitor but why this counter couldn't go up/on par with those competitor?

Posted by Ezra_Investor > 2016-05-21 14:32 | Report Abuse

@alex88812 - Because valuation. Homeriz has the highest valuation of them all.
A good business is not necessary a good investment.

Posted by choop818 > 2016-05-21 14:48 | Report Abuse

Great job Ricky!

Posted by Ezra_Investor > 2016-05-21 14:50 | Report Abuse

No offense Ricky, just to add: Numbers do not necessary paint everything. One has to look at both quantitative and qualitative analysis. For example, some companies have not been doing well in some years due to macro changes, not the business itself:

"We took a long term major USD loan to finance the expansion, but were unfortunately hit with the 2008/2009 financial crisis soon after that and were forced to restructure our loan facilities. We were saddled with high
financial costs and repayment obligations and had to operate
under an extremely tight cash flow regime."

I always liked Icon's articles because he focuses precisely on both.

Posted by Ezra_Investor > 2016-05-21 14:55 | Report Abuse

And also, I would suggest it's better to add CFFO / FCF in the article if you really want to do a comparison. This eliminates forex gain / loss and can give a clearer picture.

Regardless, well done. Keep up with the good work.

Posted by younginvestor92 > 2016-05-21 16:20 | Report Abuse

Hevea and homeritz are very close in terms of valuation, FCF/price and CROIC.... just that homeritz is in a better business compare with Hevea. This is my opinion.

Posted by soojinhou > 2016-05-21 18:00 | Report Abuse

Thank u for the nice table identifying the activity of each player.

Posted by moneySIFU > 2016-05-21 18:40 | Report Abuse

As making investment in stock market, one must think like a businessman. Doing all possible studies & analysis to know where the market & money are as well as the risks & competitions of the businesses.

Forex is part of business factors which all export companies can't avoid to consider when making business decision. Same should apply to investment decision by considering the short & long term effects from the fluctuation of RM.

After all, you need to make a choice based on your available funds & personal preference & risk stomach.

To buy or not to buy.
If to buy, which is the better one to invest.

Please remember, buying a good company at high price may not be a good investment.

However, I do agree that a good management with good business should be able to contain the risk of forex fluctuation.

So, when all seem like also good, then one should consider is the quality of the management. Is the company rewarding its shareholders by giving out consistent dividends over the past years?

Dividend policy & payout will be my main consideration when making my investment decision in selecting furniture/export stocks.

Posted by moneySIFU > 2016-05-21 18:41 | Report Abuse

Forget to say, well done again, Ricky. Thank you for sharing such great article, please keep it up.

Posted by ajim102 > 2016-05-21 22:25 | Report Abuse

excellent article.keep it up!

Posted by pingdan > 2016-05-22 00:37 | Report Abuse

haha using profit margin to say that the company is better than another company? Not really a good measure.

Let say company A earning revenue RM1 but earn RM0.25 compare to a company which have RM10 revenue and profit RM2. Isnt it company A better? Profit margin not a best thing to measure a company.

Asset turnover not a good measure? Why say the asset inflated by currency. All of the furniture company balance sheet have been inflated, not only homeriz. Then why u say it is not a fair comparison? Because homeriz lower than other furniture company? then it is not a good measurement?

Posted by calvinteo > 2016-05-22 00:44 | Report Abuse

Well done Ricky.

Should consider to include other similar listed company such as Sernkou for evaluation and comparison as well.

Tks.

Posted by KLCI King > 2016-05-22 01:18 | Report Abuse

So, talk so much, now to buy or not to buy?

Posted by Ricky Yeo > 2016-05-22 06:56 | Report Abuse

Yes pingdan, company A profit margin is 25%, another company margin is 20%. Company A is better, and im using profit margin formula profit/revenue.

Posted by sosfinance > 2016-05-22 10:01 | Report Abuse

Few things to consider/determine:
1. Is the company earnings moving to higher levels - next couple of years (due to sustainable structure competitiveness advantage)
2. Did the share price already OUTRUN the fundamental due to sentiment.

Posted by shinado > 2016-05-22 10:48 | Report Abuse

pingdan, if company A and B running the same type of business, then obviously company A is better. But more important is how much of profit can be generated from invested capital (ROIC). In my opinion, that will be a better benchmark than ROE.

Posted by KLCI King > 2016-05-22 10:51 | Report Abuse

Sosfinance, that's the thing, everyone talk about rate/margin/%/return, how about future business progress. Anyone has better insider business vision on future export prospect?

Posted by pingdan > 2016-05-22 13:07 | Report Abuse

ricky yeo, i dun think profit margin is the only way. if let say company b is grow faster than company a although the profit margin is slightly lower than company A, i disagree with you point. but if both company is grow in the same pace, yes company b is better than company.

Another more thing to consider is share price. if a company with high profit margin is far far way expensive then another company, i will choose another company with lower margin. So many things to consider before buying a share.

Posted by ieagle > 2016-05-22 21:14 | Report Abuse

Ricky, thank you for your good article

Posted by 张天师除妖 > 2016-05-22 23:06 | Report Abuse

文章和评论都读完了，发觉开始头晕了。公说公有理，婆说婆有理，待本天师明天回来再看看，哪一个股票上就是那个有道理。

Posted by Blacksails > 2016-06-01 14:24 | Report Abuse

Hevea vs Homeriz vs Liihen. Is nature of business/core business as important or more important than financial analysis in fundamental analysis? Based on the above article, Hevea is ....