Hevea Board reported its first quarter 2016 financial results on 27th May 2016. A summary of its results is shown in Table 5 in the Appendix.
Revenue for the period increases by 25.4% to RM146m while profit before tax improved by 61.7% to RM23.6m compared to the corresponding period last year. Both business segments have increased revenue and increase in profit.
The particleboard segment registered an increase in revenue and PBT of 8.3% and 31.5% to RM51.7 and RM10.2m respectively. The Ready-to-assemble (RTA) products segment has a higher increase in revenue of 37.2% to RM94.2m with its PBT almost doubled to RM13.5m.
Basing on the latest trailing twelve months’ result, return on equity and return on invested capital have improved further to 22% and 28% respectively, more than double that of its cost of capitals.
The company has further paid up and reduced its debt to just a nominal RM13.2m, from RM58.4m during the end of last year. It now has a net cash of RM80m, or 18 sen per share. Besides it has started to pay better dividend, a dividend of 2.75 sen for last financial year, or a reasonable dividend yield of 2.3% at the present price of RM1.18, commensurate to what one can get from bank interest. Going forward, I would expect Hevea to increase its dividend due its healthy balance sheet, good earnings and cash flows.
Conclusions Hevea, in the past few years, has transformed itself from a very risky company with huge debts facing a financial crisis in 2008 to a highly profitable and safe company with net cash now. It exhibits high growth in recent years and earns high return on capital with excellent cash flows and free cash flows. In another words, Hevea has transformed itself into a great company.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
lloydlim
3,969 posts
Posted by lloydlim > 2016-05-28 17:19 | Report Abuse
Price shall achieve 2.00 to hv fair value instead