Hevea is principally engaged in the businesses of manufacturing and trading of particleboards and wood-related products and investment holding. The principal activities of the subsidiaries are manufacturing, trading and of ready-to assemble furniture, trading of particleboards and other panel boards.
Its 1Q2010 revenue was RM89.4m while the net profit was RM5.27m. This compared very favourably to the same quarter in 2009 which showed a loss of RM6.18m. The most recent figure would show that a net EPs of 6.34 sen, which if annualised will be 25.36 sen. You don't have to be brilliant to deduce the valuation when share price is around 70 sen only.
For the whole of 2008, the company recorded revenue of RM342m but only managed a mild profit of just RM895,000. For the whole of 2009 revenue dipped slightly to RM327m but they managed to register a strong net profit of RM19m or an EPS of 21.1 sen.
There has been the entry a a strong shrewd substantial shareholder in the company over the last 12 months, and there has been a significant improvement in the way they manage their funding, finances and expenses. Finance cost has dropped from RM15m in 2008 to RM11.9m in 2009.
NAV has edged up from RM1.78 to RM1.85 over the past 6 months alone. Although NAV is not a useful measure unless you are liquidating the company, the share price will start getting close to NAV once investors perceive that the assets are being used productively and are generating more than adequate profits.
Investors only shun high NAV stocks if the assets are not deployed profitably.
Its prospects are also tied to some ways to Evergreen Fiberboard, and the analysts have been recommending an explosion of earnings for Evergreen for their second quarter in the coming two weeks where most corporate earnings will be announced. We can expect a similar strong second quarter for Hevea.
Number of shares 90.4m and current market cap stands at just RM61m. Last year they earned Rm19m net profit, NAV at RM1.85, now who doesn't want to own this stock. Its recent high was RM0.75 which should be taken out soon in light of upcoming 2Q2010 results. I am looking at a target of RM1.00 by year end.
NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
0 comments:
Post a Comment