Lii Hen, A Company Not to be Missed!

Lii Hen Industries Berhad is formed by a group of companies, each and every entity is specialize in their own field and link as a great value chain, delivering good furniture to the consumers.

Lii Hen Furniture Sdn Bhd and Favourite Design Sdn Bhd are producing solid wood and veneer laminated panel Bedroom sets. CT Haup Heng Sdn Bhd is specialized in solid wood and veneer laminated panel Dining sets. While EF Furniture Sdn Bhd strong forte is in Decorative panel furniture and it also produces creative and beautiful entertainment centre for modern living homes. Mayteck Kilang Kayu & Perabut Sdn Bhd is in the upstream industry, focused on sawn rubber wood pressure treatment, kiln dry, lamination and mouldings. Last but not least, Kejora Juara Sdn Bhd is in the property investment company.

Within a short span of time, Lii Hen Industries Berhad group has turned into a fully integrated wooden furniture entity. As part of fulfilling its Social Responsibility, Lii Hen Industry Berhad has also ventured into rubber tree plantation. Lii Hen Plantations Sdn Bhd and PPL Plantations Sdn Berhad formed a joint venture company with PIJ Holdings Sdn Bhd, under the Johor state government, started planting 3,473 hectares of rubber plantation in Kahang, Mersing. The project will help spur developments in the surrounding areas, provide jobs and improve overall living standards in the vicinity.

Lii Hen is a mid size enterprise, achieved an annual turnover of RM500 million in the latest Financial Year (FY) 2015. Other aspects of the company’s latest financial results are illustrated in the table below.

In terms of revenue, Lii Hen had grown 4 times through the past 10 years, from RM 138 million to today’s RM 546 million annual turnover. With the exception of FY 2013, it has achieved consistent revenue growth at an average year to year growth of 16.5%. Together with its revenue, Lii Hen’s net profit has been growing consistently from less than a million to today’s RM 57 million per annum. Consistent revenue and net profit growth means that the company never stops growing its market share from year to year. Net profit margin of 10.46% is a pretty good number too in the manufacturing industry.

One of the most attractive characteristics of Lii Hen is their total dept to equity ratio of 0.133, which is considered exceptionally low debt, resilient to financial crisis that maybe coming in the future. Similarly, Lii Hen also achieved great numbers in their current ratio at 2.453 and cash ratio at 1.225 which signifies that it has current asset value 2.453 times larger than its current liabilities and cash value of 1.225 larger than its current liabilities.

Not only Lii Hen is cash rich and low debt, it pays very attractive dividends too at 8.4% based on today’s share price. Even though which such high dividend payout value, it only accounts to a payout ratio of 0.42, meaning the company pays only 42% of its profit to share holders and there is still a large portion left for capital expenditure.

In conclusion, Lii Hen is a fundamentally sound company with consistent revenue and profit growth, low debt, and it pays out high dividend yields. Based on the latest Quarterly and Full year result announcement (FY2015), 78% of Lii Hen’s revenue comes from America. Hence being an export based company, any weakening of Ringgit is a great advantage for Lii Hen’s products, giving great potential for the company to continue grow its market share. With the above statements, Lii Hen is definitely a not to be missed company for investors as it can potentially generate good returns in both capital gains and dividends.

(8th March 2016 share price: RM 2.250)

iVolume Spread Analysis (iVSA) & comments based on iVSAChart software toolkit – Lii Hen

Lii Hen after hitting new high in Dec 2015 RM2.90 – 3.00 RM begin to drift lower on the back of strengthening MYR.

The last two Sign of weakness SoW (UT) are caused supply over-swamping demand.

The current downtrend on weekly chart may not be finished yet. However, there is support around RM2.20 level.

Wait for more SoS before accumulating Lii Hen around RM2.10 to RM2.20 level.

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This article only serves as reference information and does not constitute a buy or sell call. Make your own assessment before deciding to buy or sell any stock.