Trend Reversing on Hevea
Moronic Market Action by HEVEABOARD (Part 2)
I have stated the reasons why a public company would do a shares buyback market action in my last article. Firstly, when the management of the company thinks that the fair or intrinsic value of HEVEA shares are grossly undervalued vis-a-vis the market price. If you have read my 2014 article when I first made a buy call into HEVEA (5 Reasons Why You Should Own HEVEA (5095) (Part 1), you will notice that Heveaboard has indeed turned a corner by shedding its huge debts.
True, Heveaboard fundamental in 2016 is a lot better than in 2014 when I was buying at scrap price of RM0.95 a share before the splitting exercise (effectively RM0.2375 at current shares price). But by now, HEVEA shares price has been richly valued at even RM1.20 a share. We all know the main impetus for HEVEA shares price rocketing from RM0.2375 to a high of RM1.79, a near 7.6 times leap, is none other than the weakening of Ringgit. Of course, applause must be given to the company management as well for reaping the maximum of Ringgit weakness by increasing revenue at the same time.
However, as Ringgit starts to stabilise and making a come back as one of the best performers among Asia's emerging markets over the last 3 months along with Indonesian rupiah and the Thai baht, the main thrust of HEVEA shares price previously is now its own fierce foe. Little wonder why HEVEA shares price was pummelled and lost almost 36% or 63 sen since 6/1/2016, aggravated in part due to the negative publicity recently on Heveaboard.
An inside source from Heveaboard has tipped that it will make a full year net profit for 2015 in the region of RM62m, come Q4 announcement sometime this week. Translated, it would means an EPS of 13.9 sen and a PE ratio of 8.4x. I would not consider HEVEA's PE of 8.4x to be overly expensive. But considering the typical low market rating for furniture related companies by institutional investors in the region of 4 to 6x forward earning, it is on a high side nonetheless. Do note that history has dictated that furniture related stocks have never been a favoured sector in the eyes of institutional investors and banks alike, henceforth the low single digit PE all this while.
With the strengthening of the Ringgit, the pillar that had supported strong HEVEA shares price for the past year or so is now wobbling. And it will only get worse as the main markets that Heveaboard counts on, ie China and Japan, are now shrouded with looming and worsening economic fundamentals. In short, the strong performance of Heveaboard with a RM62m full year net profit will not be emulated in the coming years. Henceforth the rise in PE ratio and the drop in EPS going forward.
Moreover, at RM1.20 a share, HEVEA is already trading at 1.46 times price-to-book. Again, a bit on the high side for a manufacturing concern. Considering that Heveaboard manufacturing machineries are aging now with at least 10 years history and technology-wise somewhat outdated, a new round of machineries upgrade and installation are inevitable. Price-to-book will explode exponentially and NTA sliding due to both depriciation factor and a steep rise in bank loans, again.
The last round of plant expansion and upgrade cost Heveaboard the north of RM 250m, which almost brought the company into oblivion in 2008, right in the eye of Subprime storms. Will the history repeat this time with the China-led economic fears sweeping across all capital markets? Heveaboard is now walking on thin ice!
A pertinent concern among the insiders and top management of Heveaboard that many outside investors will not notice is the bottle-neck growth of the company. The revenue of Heveaboard for 2013, 2014 and *2015 (*estimated) were RM395m, RM422m and RM450m respectively. As can be seen, the growth of revenue is somewhat tepid at around 5% per annum. To support the future growth, Heveaboard is likely to look for other income stream.
An insider has revealed that Heveaboard is now seriously looking into developing a biomass project with Universiti Putra Malaysia and a go-ahead should be announced soon. Looking at the planned diversion of business strategy away from its core activity of particle board and RTA manufacturing, I will be appalled by the decision should it become a reality. But I will also accept the fact that Heveaboard current main business is approaching its corporate crossroad or dead-end sooner than I have anticipated.
Having considered the macro economics and the future prospect of Heveaboard going forward, I would conclude that the first rationale of Heveaboard invoking the Shares Buyback Scheme now as the board opined that HEVEA shares price is undervalued, hold no water.
This is further evidenced by the selling of HEVEA shares recently by a director Dato' Loo Swee Chew on 4/1/2016 and a substantial shareholder Mr. Liang Chong Wai on 3/2/2016. Separately, an insider has also divulged that some of the directors as well as the substantial shareholders of Heveaboard have been disposing the HEVEA-WB in the open market of late. Please be informed that the trading or changes in the shareholdings of warrants or derivatives of a listed issuer require no public disclosure under prevailing Bursa Malaysia rules.
I will continue to deduce the real reason why Heveaboard embarked on the Shares Buyback Scheme in my next article.
14.2.2016
More articles on Trend Reversing on Hevea
Discussions
4 people like this. Showing 40 of 40 comments
The persistence of these dumb articles just prove that Hevea's shares is under syndicate attack, and not due to poor fundamentals. Some glaring errors:
1) Buying or selling shares should not be dictated by exchange rate alone. Over the weekend, the reputable The Edge forecasted RM/USD to close at 4.7 by year end, what are you going to do? Jump back into export stocks? Last year, The Edge forecasts have been more accurate than all the analysts it featured.
2) Heveaboard makes E0 formaldehyde free particleboard that meets the stringent JIS standard. It is a product in demand in an increasingly health conscious society. It is not technologically outdated. If you are worried about technology, maybe you should worry about Mieco or Evergreen instead.
3) China is slowing, but it is due to a drop in investment, not consumption. Government is switching from growth from investment to services and consumption. As a matter of fact, contribution from services exceeded half of GDP for the first time in Chinese history. This augurs well for Hevea.
Well, let the financial results speak for itself. In the meantime, please write more so I can collect even cheaper.
You flag again I post again.
2016-02-15 11:08
There is always 2 rivalling camps, supporter and hater. Thats what made this world so beautiful
2016-02-15 11:14
The persistence of these dumb articles just prove that Hevea's shares is under syndicate attack, and not due to poor fundamentals. Some glaring errors:
1) Buying or selling shares should not be dictated by exchange rate alone. Over the weekend, the reputable The Edge forecasted RM/USD to close at 4.7 by year end, what are you going to do? Jump back into export stocks? Last year, The Edge forecasts have been more accurate than all the analysts it featured.
2) Heveaboard makes E0 formaldehyde free particleboard that meets the stringent JIS standard. It is a product in demand in an increasingly health conscious society. It is not technologically outdated. If you are worried about technology, maybe you should worry about Mieco or Evergreen instead.
3) China is slowing, but it is due to a drop in investment, not consumption. Government is switching from growth from investment to services and consumption. As a matter of fact, contribution from services exceeded half of GDP for the first time in Chinese history. This augurs well for Hevea.
Well, let the financial results speak for itself. In the meantime, please write more so I can collect even cheaper.
You flag again I post again. Yes the author is so scared to have his scheme exposed.
2016-02-15 11:14
cause I reposted tripleiii's comment, I found out this robertl and this new guys have the same behavior, think they are from the same gang
2016-02-15 12:04
The persistence of these dumb articles just prove that Hevea's shares is under syndicate attack, and not due to poor fundamentals. Some glaring errors:
1) Buying or selling shares should not be dictated by exchange rate alone. Over the weekend, the reputable The Edge forecasted RM/USD to close at 4.7 by year end, what are you going to do? Jump back into export stocks? Last year, The Edge forecasts have been more accurate than all the analysts it featured.
2) Heveaboard makes E0 formaldehyde free particleboard that meets the stringent JIS standard. It is a product in demand in an increasingly health conscious society. It is not technologically outdated. If you are worried about technology, maybe you should worry about Mieco or Evergreen instead.
3) China is slowing, but it is due to a drop in investment, not consumption. Government is switching from growth from investment to services and consumption. As a matter of fact, contribution from services exceeded half of GDP for the first time in Chinese history. This augurs well for Hevea.
Well, let the financial results speak for itself. In the meantime, please write more so I can collect even cheaper.
You flag again I post again.
2016-02-15 14:31
The persistence of these dumb articles just prove that Hevea's shares is under syndicate attack, and not due to poor fundamentals. Some glaring errors:
1) Buying or selling shares should not be dictated by exchange rate alone. Over the weekend, the reputable The Edge forecasted RM/USD to close at 4.7 by year end, what are you going to do? Jump back into export stocks? Last year, The Edge forecasts have been more accurate than all the analysts it featured.
2) Heveaboard makes E0 formaldehyde free particleboard that meets the stringent JIS standard. It is a product in demand in an increasingly health conscious society. It is not technologically outdated. If you are worried about technology, maybe you should worry about Mieco or Evergreen instead.
3) China is slowing, but it is due to a drop in investment, not consumption. Government is switching from growth from investment to services and consumption. As a matter of fact, contribution from services exceeded half of GDP for the first time in Chinese history. This augurs well for Hevea.
Well, let the financial results speak for itself. In the meantime, please write more so I can collect even cheaper.
You flag again I post again.
2016-02-15 16:13
The persistence of these dumb articles just prove that Hevea's shares is under syndicate attack, and not due to poor fundamentals. Some glaring errors:
1) Buying or selling shares should not be dictated by exchange rate alone. Over the weekend, the reputable The Edge forecasted RM/USD to close at 4.7 by year end, what are you going to do? Jump back into export stocks? Last year, The Edge forecasts have been more accurate than all the analysts it featured.
2) Heveaboard makes E0 formaldehyde free particleboard that meets the stringent JIS standard. It is a product in demand in an increasingly health conscious society. It is not technologically outdated. If you are worried about technology, maybe you should worry about Mieco or Evergreen instead.
3) China is slowing, but it is due to a drop in investment, not consumption. Government is switching from growth from investment to services and consumption. As a matter of fact, contribution from services exceeded half of GDP for the first time in Chinese history. This augurs well for Hevea.
Well, let the financial results speak for itself. In the meantime, please write more so I can collect even cheaper.
You flag again I post again.
2016-02-15 17:27
tell me what you guys post please , i also want to give him remove me
thx !
2016-02-15 18:16
Post a Comment
Featured Posts
Latest Videos
![[MQ Raya Campaign 2022] Guideline of Joining the Campaign | Let's Join Now!!!](https://mqac.i3investor.com/img/video_thumbnail/433/thumbnail.jpg)
Apps
Top Articles
1
The Alpha Trader
3
南洋行家论股
4
南洋行家论股
5
Rakuten Trade Research Reports
6
TA Sector Research
7
TA Sector Research
8
PublicInvest Research
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
MQ Trading Signals
Stock
Time
Signal
Duration
Stock
Time
Signal
Duration
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Longan_Sui
Post removed.Why?
2016-02-15 03:16