A Gem Unearthed

http://klse.i3investor.com/blogs/Goodstockstoshare/97173.jsp 

CSB exports almost all of its products. Its largest market is North America, 
where USA makes up 77% and Canada 3%. This is followed by Australia (9%), 
Europe (6%) and Asia (5%). 

Its major customers are in the US - Michaels Stores, Hobby Lobby and Larson 
Juhl - which collectively account for 50-60% of annual revenue.

CSB’s margins are far superior to many other downstream wood-related 
consumer products. Compared to domestic furniture manufacturers, such as Lii 
Hen Industries and Latitude Tree, which only earn a pretax margin of 9-11%, 
CSB’s pretax margins are 23-24%. CSB’s pretax margins have never dipped 
below 20% in the past five years. During the 2008 global financial crisis, pretax 
margins still hovered between 14% and 19%. 
 

Part II

Classic Scenic announced impressive second quarter result with EPS rising 45% from 2.07 Sen to 3 Sen. 

"The increase was mainly attributed to higher sales revenue and lower operating expenses as a result of the fair value gain from foreign currency forward contracts." Classic Scenic said in quarterly report

Concluding remarks

Classic Scenic raised Dividend per share by 50% from 4 Sen to 6 Sen. 

Trailing 12 months dividend per share is 12 Sen.

At Rm1.83, the dividend yield is 6.56%! 2x higher than FD rate!

Using Dividend discount model to value Classic Scenic will arrive at fair value of RM2.40 based on 12 Sen dividend per share, 7% discount rate and 2% growth rate.

Potential return is 30%!

Source: Investopedia.com 

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