FLBHD: From COLD STOCK to HOT STOCK??

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ttm profit: RM22.1mil

ttm FCF: RM21.45mil

1) GROWTH: RV shipments are expected to continue their robust growth this year, driven by an improving US economy, consumer preference for the RV lifestyle and innovative RV designs. (pic2&3)

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2) ROE: 13.32% (consistently >10% since listing)
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3) CASH FLOW: average FCF of RM18.45mil a year for the past 5 years. Net cash RM110.75mil vs RM57.5mil in FY12 (pic4)
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4) DIVIDEND: RM0.06 per share, at RM1.76, dividend yield = 3.4% (pic1)
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5) PER: 8.21x (pic1)
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Other valuation methods:
1) If FLBHD is able to generate 18mil FCF forever, with 10% discount rate and RM110.75mil net cash, the present value per share = RM2.82

2) Current market cap = RM181.63mil, minus net cash of RM110.75mil = buying the business at RM70.88mil
Assuming FLBHD is able to generate 18-20mil profit/FCF a year for the next few years, we will be able to own the business for free within 4 years.

**main concerns**

1) Revenue decreased 10% due to lower sales volume as well as lower selling price in US dollar, profit increased due to improved production recovery rate and achieved a lower production cost per cubic metre
2) Reliance on a single customer as 54% of revenue was from Ihlo Sales & Import Co
3) Other factors like availability of log supply, fluctuation in log prices & currency and labour shortage might affect FLBHD’s profitability.

Disclaimer:

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