Consider very good result. Anyway, Hevea two major exporting countries: China and Japan are facing COVID-19 outbreak and may impact 1Q2020 business performance.
Before placing your bets, would you calculate your risks first?
Hevea's hidden risks: 1. RTA segment is its core revenue contributor but it relies upon two (2) major customers heavily to generate its profits. It has the similar risk like Focus Lumber -- customer concentration risk. 2. Raw material risk 3. Labour supply risk (It's labour intensive) 4. Forex risk
p/s: It's too much uncertainties that being an investor cannot easily handle it. After understanding the above risks, are you still interested on it?
Valuation wise, its calculated price would be ranging between: 1. 0.26 (PE 10.50) to 2. 0.71 (PE 28.50). How about the industry PE? 16.39 PE.
Manufactured wood industry is cyclical. Now its at down cycle, but no one know when is up. Low can get lower, its good to accumulate at low esp company with strong balance sheet and fundamental like HEVEA.
Sense maker, you are painting a very gloomy picture of the future of Hevea. The current situations will definitely impact negatively on the bottom line of the company. The MCO also causes a few hiccups in the production & shipments. As far as future demand for its products, your guess is as good as mine.
The RTA sector is labour intensive and was badly hit by labour shortage in 2018-2019. This also led to lost in order. We can see that situations were improving until the recent MCO. They went back to production last Sunday but only working at 25% capacity. They also sorted out the problems of shipments. Don't think they will loss any order unnecessarily.
The particleboard sector stopped work on 21/3 and can resume once the supply of logs and resin has been secured.
No problem with the production of king oyster mushrooms. Sales to hypermarkets increased by 5 folds but restaurants business dropped significantly. The overall sales will be much higher once the MCO is over.
The bottom line of this 2 months will definitely be negatively impacted. Hopefully, they can overcome that quickly in the coming months.
The company has a very strong BS and should be able to weather through this difficult period.
The company has a high dividend pay out record. Hope the dividend can be maintained or not dropped much in the next few quarters.
think for past 5 yrs, Hevea paid dividend quarterly. Net cash/cash equivalent about RM110 million. Recurring non cash expense of about RM25 million alone is more than adequate to pay annual dividend of 4 sen.
Kon, I agree with you. the BS is very healthy. As at 31/12/19, Cash in hand (62mil) Plus Tax exempted investment (66mil), we are looking at 128mil. 4 sens dividend is sustainable.
At 32.5 sens, the dividend yield is a whopping 12.3%.
The RTA sector is labour intensive and was badly hit by labour shortage in 2018-2019. This also led to lost in order. We can see that situations were improving until the recent MCO. They went back to production last Sunday but only working at 25% capacity. They also sorted out the problems of shipments. Don't think they will loss any order unnecessarily.
The particleboard sector stopped work on 21/3 and can resume once the supply of logs and resin has been secured.
No problem with the production of king oyster mushrooms. Sales to hypermarkets increased by 5 folds but restaurants business dropped significantly. The overall sales will be much higher once the MCO is over.
The bottom line of this 2 months will definitely be negatively impacted. Hopefully, they can overcome that quickly in the coming months.
The company has a very strong BS and should be able to weather through this difficult period.
The company has a high dividend pay out record. Hope the dividend can be maintained or not dropped much in the next few quarters.
In my opinion, this share is severely undervalue at current price. NTA per share is 77 sens. Even cash per share is 22.5 sens.
Gohku, I hope more people like you share the same view. This is a very good dividend stock with the potential of better earning when we get back to normal. Don't forget the company did enjoy double digit EPS for 3 years during 2015-2017.
On April last year, the share price was 0.73 when the USD currency versus RM is lower than this time. Heveaboard can consider as undervalued stock at this moment. Can collect and wait for rebound..
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....
enigmatic ¯\_(ツ)_/¯
916 posts
Posted by enigmatic ¯\_(ツ)_/¯ > 2020-02-01 13:29 | Report Abuse
I have also lost money in stocks, but not as much as those who lost money here, esp those who held since 2017.
Seriously, I wouldn't know what to do if I were in your shoes.
I sincerely hope Hevea's business would improve in the next few quarters to alleviate the painful losses suffered.