Relax.. just be patient.. allow market to adjust first.. QoQ will continue to shine.. Can not wait sell then pass to those who can wait and willing to reload more on weakness..
HLG also amended their TP from 48c to 83c now. Bcoz above expectation. Ha.. ha.. my short-term valuation is better than IB. PB x 1.30 instead PB x 1.10 towards Q4. Let wait and see whether Hevea will continue to beat expectation or not. I am very positive.
Evergreen highlighted higher ASP across the market. While Hevea highlighted company will continue to benefit from market turn around. So no worry, company will ensure its Fair Value to reflect in its share price accordingly.
Capex spending on automation shall continue in order to cut down heavy relying on foreign workers or Labour. And so far Hevea is on the right track to spend more on automation.
Mkt seems to behave opposite to the valuation of HLb. When it valued price low, mkt price up and vice versa. For heavea to go up further, HLB needs to value price downward.
There is plenty of room for Dividend payout ratio moving forwards.
IF company performance improve to EPS 2c per Q. Then I believe Hevea will continue its generous Dividend payout and will be in growing trend. Although I prefer company can continue to invest for growth.
Last Q company allocated it for Capex investment to increase more adoption of automation (as per Q3 company invested RM6.1m in PPE) and reserved it for upcoming Solar Energy Generating System. Both initiatives will translate into increase in production efficiency and near future electricity cost savings. As I noticed Hevea entered JV with Salcon on Solar Power Purchase Agreements.
While market always emotional especially Traders, some might react on Index movement or unfavor news likes Japan might declare State Of Emergency again (in fact just like our CMCO doesn't affect import/export at all), new strain of virus and etc. So long it is temporary, nothing to worry too much
Hevea's book value at 74c and moving forward valuation at PB x 1.20 (ha.. ha.. my valuation after Q4). HLG current "Buy" called PB x 1.10 about 83c before Q4 result. Just grab at discounted price = Boarding time and wait patiently at boarding area.
@sense maker your f'cast for Q4 result EPS 2c. Next month I hope it meet the market expectation close to EPS 2c. It might be slightly affected due to freight availability, can not ship out in Dec20 then will flow to Jan21.
Seeing more and more Heveagro mushroom in supermarkets like Jaya Grocer etc. Hopefully will become revenue contender within 3 years. Buy and hold this baby!
Covid-19 – A silver lining for Hevea. Prior to MCO, Hevea was experiencing declining net profit margin (Figure #1). This was due to an oversupply in the panel board market as local manufacturers faced (i) stiff competition from regional players such as Thailand and Vietnam in addition to (ii) US-China trade war which caused an oversupply of particleboards in China due to its manufacturers diverting its US export to the local China market. However, the incidence of Covid-19 and subsequent rise in work-from-home (WFH) arrangements led to an increased in furniture purchases in key markets (i.e. higher furniture exports by Malaysia than pre-Covid levels; Figure #2). As a result, panel board manufacturers also experienced a secondary effect in the demand recovery for panel boards due to demand from the furniture makers.
We expect Hevea to post strong earnings in 4Q20 particularly in the RTA division due to Japanese New Year, as Hevea’s profitability typically peaks in 4Q. Going forward in 2021, the group also has decent earning visibility, securing RTA orders up to April 2021. In the near term, freight cost volatility and freight availability remain a challenge to the group.
With production disruptions behind them and better RTA sales volumes expected from the WFH trend as well as Japanese new year coming up, we expect Hevea’s profitability to accelerate going forward.
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....
Sean Eng Kwong Howe
18 posts
Posted by Sean Eng Kwong Howe > 2020-11-26 01:29 | Report Abuse
windfall tax?