Reason 1 - Great time is just around the corner
Average USD/MYR had gone up 8% from 4.0171 in Q2 2016 to 4.3305 in Q2 2017.
Q2 2016 net profit to shareholder was RM4.64 mil.
Assume
constant sales of RM52.74 mil in Q2 2017, an additional RM4.11 mil
flows direct to bottom line. Bear in mind sales grew 11% last year.
In other words, net profit to shareholder should grow 88.6% in Q2 2017! Almost the same with Q1 2017.
Reason 2 - Further expansion in US
In Annual Report 2016 dated April 2017, Focus Lumber disclosed it will continue to expand in US. it is in a position to procure more customers from the lucrative RV market.
The group is confident revenue and profit will improve.
Revenue improved every year for last 5 years from Rm132 mil to RM201 mil.
Reason 3 - Bumpy Dividend coming soon
I forecast net profit to shareholder at RM25 mil. Operating cash flow was RM24.88 mil in Q1 2017. Yes, Q1 only, not whole year.
Focus Lumber disclosed new information in Annual report 2016. "Our
cash requirements, other than for operating purposes, are primarily for
additions to property, plant and equipment, acquisitions and payment of dividends."
The
group estimates capex of RM5 mil to improve manufacturing facilities.
That leaves a balance of RM20 mil for payment of dividends.
Focus Lumber has 103.2 mil shares outstanding.
RM 20 mil divide 103.2 mil equal 19 sen. At 1.74, dividend yield is 11%!
Dont forget Focus Lumber had RM1.07 per share net cash. I won't rule out a special dividend of 30-50 sen. Do your own math.
This is not a buy recommendation. Consult your own investment adviser before you invest.
http://klse.i3investor.com/blogs/OngMaliOng/126550.jsp
