Results

• Homeritz’s 4QFY15 revenue of RM38.11m (+15% yoy) was translated into PATAMI of RM6.64m (+28% yoy). This took FY15 PATAMI to RM23.55m (+16% yoy), accounting for 91% of our full year estimation.

Deviations

• Higher than expected operating expenses.

Dividends

• A final single tier tax-exempt dividend of 2.5 sen was declared in 4Q (FY14: 3.1 sen).

Highlights

• FY08/15 review… The group achieved revenue of RM146.42m, an increase of 15.1% yoy, mainly due to growth in volume of sales and stronger US$. Its PATAMI improved 27% yoy, from RM20.25m in FY14 to RM25.70m in FY15.

• 4QFY15 review… Revenue increased 14.7% yoy. PBT was up 44% yoy to RM8.95m in 4QFY15, from RM6.23m in 4QFY14. The improved performance in 4QFY15 compared to 4QFY4 was attributed to the strengthening US$.

• Stronger USD… Based on our ec onomist’s projection, RM would remain weak until end-2015. Our MYR yearend forecast is now revised to RM4.30/US$ from RM4.00/US$. Sensitivity analysis shows that every RM0.10/US$ appreciation will boost FY16 net profit by about 6%.

Risks

• USD weakness against RM; high raw material prices; high labour costs; unexpected economic downturn; and production or operational risks.

Forecasts

• Unchanged, pending update from management.

Rating

• Maintain BUY
• Posi tives: 1) the group would benefit from strong US$; (2) its revenue and PATAMI are expected to grow at CAGR of 11% and 27% respectively from FY14 to FYE17; (3) forecasted FY16 net cash per share of 16.6sen; and (4) still attractive FY16E DY of 4.5%, based on 40% payout ratio.

Valuation

• We maintain our BUY recommendation as well as our target price of RM1.42.
• Our valuation is pegged to unchanged P/E multiple of 11x of CY16 EPS.

Source: Hong Leong Investment Bank Research - 30 Oct 2015