Somewhat odd that Focus Lumber Bhd with a proven track record of more than a decade customer relationship with Ihlo Sales & Import Co. and exposure to high margin niche recreational vehicle industry is actually selling for RM126 million. Considering the fact that it is holding RM87 million in liquid securities and even if we treat the cash and bank balances as purely operational so that ~RM50 million can be fully distributed to shareholders, that arrives at RM76 million enterprise value. With the ability to generate at least RM10 million normalized free cash flow while actively searching for new customers to reduce reliance on Ihlo Sales & Import Co., the business is actually selling for a cash yield of ~13%.
Fair enough that the 20% slowdown YTD in recreational vehicle sales in US is a concern and that the huge exposure to a single customer more often than not results in lower valuation premium. Perhaps a deep value play that doesn't fit my appetite tho.
I get that this stock kena sell off due to trade war and also their main customer is from US. But I cannot believe ppl are still selling at rm1.10... Even if FLBHD go bankrupt now, their liquidation value is still around rm1.2-1.3.. U tambah their profits in coming yrs and FLBHD is easily worth rm2..
I dare u search for another counter which is as undervalued as this at bursa. Better buy before LINHY starts buying or u’ll miss the money train.
Honestly I have some FL on hand, losing big on paper. I do not see good prospect on it. Too painful to cut big lost thus still keeping it. For those thinking to come in, my advice is to put your limited money elsewhere to have better and peaceful investment.
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....
inv3stor
26 posts
Posted by inv3stor > 2019-09-12 12:51 | Report Abuse
tp rm3