Heng Huat FY15Q1 Financial Result
| HHG (RM mil) | FY15Q1 | FY14Q4 | FY14Q3 | FY14Q2 | FY14Q1 |
| Revenue | 26.5 | 23.2 | 23.1 | 24.1 | 21.3 |
| Gross Profit | 10.6 | 8.8 | 10.4 | 10.4 | 9.7 |
| Gross% | 40.0 | 37.9 | 45.0 | 43.2 | 45.5 |
| PBT | 3.5 | 3.5 | 2.3 | 3.7 | 3.8 |
| PBT% | 13.2 | 15.1 | 9.9 | 15.2 | 17.6 |
| PATAMI | 2.9 | 3.4 | 1.2 | 2.7 | 3.0 |
| Biomass Rev | 19.9 | 18.1 | 18.6 | 19.7 | 16.7 |
| Mattress Rev | 12.6 | 9.8 | 9.1 | 9.2 | 9.1 |
| Biomass OP | 3.6 | 3.6 | 4.3 | 4.2 | 3.5 |
| Mattress OP | 0.3 | -0.1 | -0.1 | -0.2 | 0.3 |
| Total Equity | 70.0 | 68.3 | 64.8 | 43.1 | 40.4 |
| Total Assets | 114.3 | 109.8 | 110.5 | 95.3 | 90.5 |
| Trade Receivables | 26.7 | 22.3 | 19.7 | 21.4 | 19.2 |
| Inventories | 4.8 | 5.9 | 6.3 | 5.4 | 4.6 |
| Cash | 14.1 | 15.2 | 18.8 | 2.6 | 2.4 |
| Total Liabilities | 39.9 | 36.8 | 42.2 | 49 | 47.4 |
| Trade Payables | 13.1 | 11.2 | 9.2 | 11.4 | 9.4 |
| ST Borrowings | 11.4 | 9.6 | 12.1 | 15.5 | 15.3 |
| LT Borrowings | 14.3 | 15.3 | 19.0 | 20.5 | 21.4 |
| Net Cash Flow | -1.2 | 13.0 | 16.6 | 0.4 | 0.2 |
| Operation | 4.9 | 13.5 | 8.7 | 6.5 | 2.6 |
| Investment | -4.3 | -7.7 | -7.5 | -5.1 | -1.8 |
| Financing | -1.7 | 7.3 | 15.5 | -1.1 | -0.7 |
| Dividend paid | 1.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| EPS | 1.42 | 1.67 | 0.64 | 1.69 | 1.91 |
| NAS | 0.34 | 0.38 | 0.38 | 0.27 | 0.25 |
| D/E Ratio | 0.17 | 0.14 | 0.19 | 0.77 | 0.85 |
Due
to increase average selling price of its biomass materials &
related products, Heng Huat's FY15Q1 revenue improves 24.4% compared to
corresponding quarter of FY14Q1 last year.
However,
because of higher raw material price as well, gross profit increases by
only 9.3%. Gross profit margin reduces from 45.5% to 40.0% in the same
period.
Compared
QoQ to preceding quarter of FY14Q4, revenue increases 14.2% but PBT is
flat mainly due to higher selling and admin cost (annual increment and
higher bonus).
Quarterly
revenue from both biomass & mattress divisions reach record high
but operating profits stay flat. Revenue from mattress division actually
shows a good growth of 28% QoQ.
HH
not only sells those super hard mattress made from biomass fiber, it
also sells spring mattress. So it might benefit from accelerated
completion of new properties in the country.
Other than that, balance sheet and cash flow remain fairly healthy.
Fibre Star Pocket Spring Mattress
HH
has paid its first ever interim dividend of 0.5sen (RM1.03mil) for its
FY15 earlier this year. There is no dividend for FY14. There might be
another round of dividend for FY15.
Its
share price has rallied from 50sen to above 70sen level since the start
of Apr15. I actually do not expect it to climb so fast.
The
surge in share price was fueled by an article in The Edge on 27 Apr in
which Heng Huat's executive director "hinted" that the company can
achieve revenue and net profit of RM100mil (+10%) and RM15mil
(+20%) respectively in its FY15.
So, latest Q1 PATAMI of RM2.9mil must have disappointed many investors and speculators thus its share price drops significantly.
Besides,
Heng Huat also proposed bonus issue of 1:2 and transfer to main board
as expected. These proposals have been submitted to Bursa Malaysia for
approval.
Is it a trend now to give bonus issues soon after listing?
"We got annual salary increment and higher bonus. How about you?"
Export sales make up 65-70% of HH's sales and China alone takes up 45%. Other countries are South Korea, Australia etc.
Director mentioned that strengthening of China RMB against RM will benefit HH. Its Forex gain in Q1 is just RM161,000.
Low
crude oil price and slow down in China's growth could be concerns to
HH. It's good that HH can explore new markets esp in Europe.
Using
the company's forecast RM15mil PATAMI as a guide, target FY15 EPS for
HH will be 72.9sen. So my target price will be 73sen base on PE ratio
10x.
HHGROUP (0175)
http://bursadummy.blogspot.com
