Posted by soojinhou > 2017-02-26 12:02 | Report Abuse

30% growth in Australian segment? That's way too optimistic. Building approval has been contracting. There's a increasing glut of apartments in Melbourne and Brisbane. http://www.abc.net.au/news/2017-01-09/australia-construction-index-building-approvals/8169654

Posted by Jackson Yuen > 2017-02-26 17:59 | Report Abuse

Greetings,

The justification for projecting 30% growth is considering the acquisition of Outset Pty (19/9/16). The Q4 report has pointed out that the actual acquired date is 1/9/16 (page 23). Although they did not disclose their % ownership in the company (not that I can see in the Quarterly report), we believe the stake is high enough (50%+) to classified it as a subsidiary based on the accounting treatments (consolidating the revenue, as associates only recognise the net income). We then look at the performance post-acquisition (just four months), the Q4 Australian revenue was RM103m (Q3: RM 58m, a growth of 77% against previous quarter). Then again, for simplicity, how much % is due to the existing operations we do not know, but the Q4 report did explain the contribution was due to Outset. So if Kim Hin merely consolidating 4 months already 70%+, the whole year (FY17 we are projecting 30%) is likely to be much higher. You point out a good thing, building approval is contracting, but the growth we are projecting is what we called acquisitive (rather than organic). Hope it explains my thought process.

Kind regards

Posted by soojinhou > 2017-02-26 18:22 | Report Abuse

Thank you for the explanation. It does seem like KimHin didn't overpay for Outset. But I can't get over them overpaying for Johnson Tiles. That's a very expensive acquisition for a brand (non-tangible) and as you can see it contributes close to nothing to their bottom line.