probability

Lee Hing industrial LIIHEN – unique furniture unit?


LIIHEN is a company based in Muar Johor, a holding company, its main business is furniture, is an integrated manufacturer of wooden furniture. In April 2000, it listed on the Malaysian Exchange gem, then in August 2002 and transferred to the main Board.

Look back at the past few quarters, LIIHEN turnover from FY14Q2 onwards, up to 11 consecutive quarters. Moreover, over FY14 FY15 net profit nearly doubled to 100%, progress is very large! FY15 results also include a RM4.25m intangible assets impairment losses or LIIHEN performance will surely be more than this amount. What factors cause LIIHEN grow so big?

LIIHEN FY15 has up to 92% of sales comes from exports, while local accounts for only 8%. According to FY15 annual LIIHEN 92% sales are in US dollar transactions, means that all exports be used dollar transactions. Therefore, $ LIIHEN performance has a direct effect on the trend. USD/MYR FY14 exchange rate averaged at around 3.50, FY15 Supreme had go to around 4.40, FY16 fell to 4.00. In theory, LIIHEN certainly benefited from net profit of foreign exchange. LIIHEN almost 3 quarters of foreign exchange, as follows:

FY15Q3 – RM3.5m profit
FY15Q4 – RM2.6m loss
FY16Q1 – RM7.2m loss


FY15Q3 foreign exchange earnings aside aside, LIIHEN cumulative foreign exchange loss was nearly 2 quarter up to RM9.8m of cases, record performance! It also means that foreign exchange earnings is just a Bonus for LIIHEN, business continues to grow is the point. In February this year to rent a property in Muar Johor single storey factory building, to act as the new warehouse. This would also prove LIIHEN production capacity increase, the old warehouse was not large enough.

From a business perspective, LIIHEN orders continued to grow, while its FY15 turnover per quarter average growth rate of 15%. Based on the United States accounted for 78% of the total turnover, United States economy and the movements will be indirectly affected LIIHEN business. United States in April and May new home sales is 586,000 and 551,000, since September 2009. At present, although the United States economy's road to recovery will not be smooth, but United States the overall trend of new-home sales are on the rise. For LIIHEN, this was a positive factor.

Over the next few quarters, LIIHEN will face many challenges. From July, the minimum salary from RM900 per month up to RM1000, also indirectly enhanced the LIIHEN's production costs. In addition, LIIHEN has long been a shortage of labour. In response to this problem, LIIHEN outsourcing some production of furniture parts to sub contractors. This is a smart move, LIIHEN labor and time savings.


Prospects for the future, LIIHEN business does have the capacity to continue to grow, exchange losses are expected to be reduced, this year's performance not surprisingly should surpass last year's performance. It is worth mentioning that, LIIHEN is LATITUD, HOMERIZ and POHUAT are not the same and peers. Very unexpected, its performance is not affected by seasonal effects. For example, from January to March each year, furniture industry production and sales will be lower, but LIIHEN does not seem to be affected. What is going on, I don't know.

LIIHEN currently holds RM82m of net cash in hand, equivalent to RM0.45 per share in cash. As long as performance can be maintained, and continue to be a high rate is not a problem. Last October, LIIHEN sent bonus shares and the stock splits, dividends must be adjusted not authentic. Therefore, the author calculates by the 21cent dividend and Closing Price of the day shares of RM3.06, dividend yield and 6.86%. Conservative estimates assume LIIHEN in FY16 and FY15 performance, net income per share was 37.50cent. Than PE 10 times to extrapolate, LIIHEN potential value was RM3.75 per share, about 22% up space.

From the technology trend, after 1 month and a half of small adjustments, LIIHEN volume rebounded from a support 2.85 again today. Perhaps, LIIHEN soon to open another high tide.

Is share!
Note: If you want to learn about a company's business development, fundamentals and future prospects, you can contact the author

2016-07-19 20:17

paperplane2016

Haha. Good for div

2016-07-19 22:07

moneySIFU

Busy like hell lately.... Hi everyone!!!

2016-07-19 23:10

paperplane2016

Empty tong sifu

2016-07-19 23:28

probability

Hi moneySIFU...you must be somewhere in overseas....on the flight all the time....he he

2016-07-19 23:29

duitKWSPkita

MoneySIFU

No worries after this month new financial year u will be all right

2016-07-19 23:52

RicheHo

hi sifu sekalian, please share share your experience with me haha

2016-07-20 01:06

probability

To me...the ultimate reason to own this stock is because of the following:

http://www.advisorperspectives.com/dshort/updates/New-Home-Sales

Look carefully on the 'POPULATION adjusted homes sales'.
Nothing can be more obvious than this core driving factor..

we can't have future with nuclear families where 2 families or 5 or 6 people stay in one house..;)

2016-07-20 01:18