HIGHLIGHTS
- Revenue growth in all geographical segments
- Optimistic management in business prospects
- Revised fair value from RM 1.76 to RM 1.82
ANALYSIS
- Accounting profit dragged down by deferred income tax from previous year and exchange translation differences. KIMHIN’s income tax for the quarter ballooned 62% qoq by deferred income tax adjustments (QR – Note 13). Meanwhile, exchange translations differences for current quarter registered a loss of RM 4.509 million against a gain of RM 5.306 last year. Operational cash flow for FY2015 remain excellent with 28.2% growth yoy.
- Healthy top-line growth of 10% yoy and 17.2% cumulative YTD. Operations in all geographic locations saw positive growth with Malaysia (+10.2%), China (+13.1%), Australia (+53.8%) and Vietnam (+419%). Increase in revenue was due to excellent growth in Malaysia and better contributions from Johnson Tiles Pty Limited.
- Mixed earnings result from geographical segments. Results in Malaysia and China remained solid, registering growth of 138% and 21.6% respectively. Meanwhile, operations in Australia sunk into a loss of RM 3k from a profitable RM 796k earnings. Vietnam’s operations have yet to become profitable, although KIMHIN has managed to pare down losses as operations approach profitability.
- Looking forward, the Group expects FY2016 results to be favorable subject to performance of national and regional economies, fluctuation in main operating costs and forex rates.
VALUATION
Revised fair value of RM 1.82 based on a
10-Y DCF valuation justified by; (i) 6.5% supernormal growth (ii) 8%
required return (iii) 1% terminal growth. At current price of RM 2.19,
implied margin of safety is -16.9%. Upgrade to FULLY VALUED.
Thank you.
Shaun Loong
Disclosure: At time of publication, I own stocks in KIMHIN. This article has been edited on 11 March 2016.
KIMHIN (5371) - KIMHIN Quarterly Results FY2015Q4
https://megamicrocaps.wordpress.com/2016/02/25/kimhin-quarterly-review-fy2015q4/
