"With growing demand for Yamaha's products, HLYM's capacity expansion plans were expedited to fulfil the piling orders and to meet the future growth of the business. Several new facilities have been installed and mass production commented in FY2021 to increase supply output. A new assembly line and inspection facility, equipped with the latest motorcycle evaluation technology, were installed to produce motorcycles of the highest quality." AR 2021.

Hi ZZProzaz, it is from people who works in this industry. I'm not sure what was the capacity utilisation prior to Covid 19 but I guess there has been some expansion done and in progress.

It is harmless with minimal cost especially when the earning is recovering. I think sales and profit in 2022 has a chance to outperform 2020, or achieving about the same.

Also, why would FPI invest and hold 22 hectare land just beside Wistron's factory?

But the order that Wistron gave to FPI in 2020 was not sikit-sikit. In addition, FPI's share valuation is not high, Wistron can buy the shares in the open market if she wants to rather than spending lots of money to build new plant. Could it be possible that Wistron is doing higher level assembly and this means FPI will be getting more contracted sub-assembly work?

If this trend continue there is a chance that goods to be shipped in 2022 may be touching the level of year 2020 or better.

Number of containers shipped has been increasing sharply in the past 3 months.

Hi Starship2, one more reason could be the declined of EPS in latest report QoQ. People are afraid that what happened on glove comoanies happens to plastic manufacturers. Maybe many of them are same group of investors who prefer to invest in cyclical stocks. For cyclical stock, you must learn when to run away. Unless the normal sales / demand is clear, they are very careful to put their money back to this stock.

Given the following situation:
1) 2 shift production (3 shift for certain models)
2) 10% to 15% downtime due to part shortage
3) hiring more operators
4) 80% capacity utilisation
I believe that:
1) demand of motorcycles is high and will remain high (new hiring won't happen just to fill back log)
2) critical part supply (could be chip) is hand to mouth situation due to tight supply and high demand at the same time
3) there's capacity to absorb increasing order and hiring more operators can then be making sense
All these together with other data, next quarter result will be very satisfying. I would be surprised if it is not.

Or we can, in the next AGM ask them to explain why they didn't publish the complete Q&A for last AGM.

Hi Observatory, I observed the same too. Actually there's one more thing about hiring of operators. Perhaps some of the info are sensitive to be disclosed. However I agree with you that they should at least give a proper explanation to us. Probably next time we can ask to change the share registrar company. According to the rule the minutes have to be signed by HLIND chairman before it can be published. Either the chairman has also not performed a good job at this or there are other problems we do not know.

And why Wistron has to compete with FPI at the same place here at Malaysia? Furthermore both are Taiwanese companies. Normally Taiwanese companies are known to cooperate with each other rather than competing with each other.

Hi Desmond, then, why Wistron bought up big shares of FPI?

Above QnA of latest HLIND AGM

The Group has been gradually declaring higher dividend payout over the years
with dividend yield around 5% at the current share price. The Group is likely to
continue to declare dividend on this basis.
6. The share of profit from Vietnam's associate has declined every year from
RM134 million in FY2017 to RM36 million in FY2021. Noted that the decline
has started before the pandemic. What are the root causes? What have the
Vietnamese management done to reverse the trend?
Response:
There was a strong competition on pricing in Vietnam market especially from the
major competitor. Yamaha Vietnam will be introducing a new scooter model and
this is expected to enhance the financial performance of Yamaha Vietnam.
7. HLI has exited the concrete roofing products and distribution of building
materials. The performance of the HLI in the future will be dependent solely
on the manufacturing and sale of consumer products comprising
motorcycles, spare parts and ceramic tiles.
With very strong balance sheet and strong cash reserves, can the
Board/Management provide some updates/guidance to shareholders on
expansion of current core business and potential new business that can
reduce its dependence on the motorcycle business in Malaysia and
Vietnam for its future growth.
Response:
Both ceramic tiles and motorcycles have great potential to grow their businesses.
The Group will continue to explore on new businesses, both in terms of organic
growth and inorganic growth. The Group will also continue to look for opportunity
for potential merger and acquisitions.
8. How is Vietnam e-bike to affect Vietnam’s motorcycle industry? Will it affect
Yamaha’s market share? Will Yamaha come out with e-bike in Vietnam?
Response:
E-bike market in Vietnam is still very early stage with only a few players involved,
this hence would not affect Yamaha’s market share for the time being.
Nonetheless, Yamaha Vietnam has included e-bike industry in its planning.

2020: RM652.66 million), while profit before taxation (“PBT”) declined to
RM6.2 million (1st quarter ended 30 September 2020: RM93.0 million). The
lower revenue and PBT was due to lower sales across all product segments
because of Movement Control Order (“MCO”), which caused the
curtailment of production for 2 months. (Quarterly Report for 1QFY22)
(a) With the gradual reopening and normalisation of economic activities, to-
date, how and to what extent has it impacted the orders for the Group’s
products?
(b) Has the Group’s current production level normalised?
Response:
(a) With gradual reopening and normalisation of economic activities, the orders
for the Group’s products have progressively improved towards the level prior
to the recent lock down.
(b) Although all our factories have resumed operation, there is continual
disruptions to our productions as a consequent of COVID-19, supply issues
and absence of workers due to quarantine.
4. The Group’s inventory has increased from RM212m in FY2020 to RM303m
in FY2021. What is the reason of the high inventory on 30 June FY2021.
(page 69, Statement of Financial Position)
Response:
The increase is mainly due to the increase in the CKD parts stocks in Yamaha
operations. As the CKD parts were ordered 3-4 months ahead, the stocks have
increased because of the continuous arrival of the CKD parts during FMCO
period while the production was curtailed.
5. Page 22 of AR states that "Earnings, capital expenditure requirements,
borrowings repayment, capital adequacy, dividend yield and other relevant
factors are considered by the Board in determining the actual dividend
payout."
As of June 2021, net cash plus money market fund was RM1.25 billion or
RM3.8 per share. The capex was only about RM50 million for FY2021.
As asked in previous AGMs, does the Group have any concrete plan to
substantially invest the excess cash in high return projects? Failing that,
can the Board set a date to return excess cash to shareholders? This will
help to increase the Return on Equity which has been declining.
Response:

1. Guocera Holdings Sdn Bhd Group’s new strategy is to move away from
ceramics to focus on the mid to high-end market segments for porcelain
tiles, particularly those with distinctive product features and concept-
based selling. The immediate and long-term plans are to broaden and
deepen market penetration for both domestic and international channels.
(page 19 of Annual Report 2021(“AR2021”))
Apart from key international markets like Vietnam, Thailand, Singapore and
Australia where the Guocera brand is well-recognised, what are the
Group’s plans in terms of penetrating new international markets? What are
the other new international markets that the Group targets to penetrate?
Response:
For Guocera, besides the few countries mentioned in the question, we also export
to Europe, Middle East and America. With our focus on higher-end products, we
are now able to offer a better concept range of products via our existing network
of customers to improve the demand.
2. The Group’s revenue contributed by Singapore customers increased
significantly to RM34.1 million (2020: RM15.3 million) (Note 30, page 129 of
AR2021).
Which of the Group’s products attributed to the increase in revenue from
Singapore customers? What is the expected demand from Singapore
customers for the Group’s products, going forward?
Response:
The significant increase in the Group’s revenue from Singapore customers in
FY2021 as compared to FY2020 which was mainly contributed by Guocera
Group was because of shorter lock-down period in FY2021. We believe that our
higher-end products will also help to improve our sales from Singapore.
impairment losses are disclosed in Note 30 of the Financial Statements (page
121 of 2020 Annual Report).
3. The Group’s 1st quarter ended 30 September 2021 (“1QFY22”) recorded
57.6% drop in revenue to RM277 million (1st quarter ended 30 September

Hope to get at least 25 sen dividend

Happy New Year

Recently bought a tin of Able Farm evaporated milk at Econsave. There are quite a lot of different brands so I think the competition is stiff. Other brands such as Marigold sells the same product at much higher price. The cheapest one I think is Teapot. I stood there for almost 20 minutes to observe. Througout the observation period 2 customers bought the product. The first customer said, "let's choose the cheaper one" then he took a non Able Farm product. The second customer came after a few minutes and he loaded his trolley with many Teapot sweetened condensed milk. So it makes me think that most of the customers looking for sweetened condensed milk or evaporated milk are price-sensitive. For those who have high income, they might choose the premium brand such as Marigold. Hence, I think, if one wants to be successful in selling these product, it has to be either the cheapest or best quality. What is your thought? (I do hold some shares of Able Global, I hope this company to do well, but I see no good avantage it has over its competitors at local market in Malaysia.)

@Thirai, if the earnings stand steadily at 10 sen per share till next quarter the PE would be higher because many people will start to believe the plan that Sonos is moving out all the operations in China to Malaysia for products to be exported to the US and this is going to complete in 2022. I read this news some time ago and if this is going to be materialised we can expect a fabulous top and bottom line boost next year.

@JKing. I'm trying to do deeper research and I'm not sure if you could help me on this. Does FPI export Sonos finished product directly to US or is it sent to other factory/company for final assembly? Which company will export the final product to US?

And probably because of that our government is confident that our manufacturers are able to catch up by end of this year to achieve sales slightly better than last year.

I believe quite a lot of inventories (perhaps RM 45 millions) are actually goods that are already landed at US but somehow not yet recognised as revenue or cost of goods sold due to the term of trading. I am not able to verify this at the present but hope someone to enlighten us.

It is not so easy to move out. You got to look at other requirements. Otherwise Lii Hen would have first appeared somewhere in Africa by the name Great Afri Furniture etc.

I think the risk of missing a good entry has become higher than the risk of loosing the opportunity to buy at lower prices over time because:
1) Things are getting better and guys running the business will buy more
2) When things are getting better insiders including management, suppliers, employees are receiving good news and they will buy more too
3) Good news will come out on the newspaper eventually and other retail investors will be interested to buy
This risk-reward curve will quickly skewed in 3 months time so the more waiting, the more expensive would be to invest.

This should be the trend and ignoring the short-term volatility this is an achievable target price with justifiable reward to buy at current price.

@Thirai, the Q3 result is already out for a few days and the price doesn't go south. So I believe this is due to change of opinion of existing Liihen's shareholder where they are looking forward for the recovery of the earning which is yet to be reported in Q4 report rather than the damage which is already done and accounted for in Q3. I agree that the appropriate PE for this stock is around 8 but I think we should use forward PE instead of rolling 4 quarters in the past because we do not expect the same damage to be repeatable. If we are using forward PE, I think reasonable annual EPS should be RM 0.15 x 4 = RM 0.60. Target price should be RM 0.60 x 8 = RM 4.80. Buying at 80% discount the discounted target price should be around RM 3.80. Assuming 40% dividend payout, this should be able to support the price at RM 3.80 or higher.

@LKOH Thanks. I would like to find out and buy one to try.

I thought Dairy Champ is manufactured by Etika Group? What's the relation between Etika Group and Able Global / Johore Tin?

Dairy Champ? Didn't notice. Is it sold in Aeon or 99Mart?

@Thirai - Indeed 2021 is an awful year for Liihen because all factories lost production for 3 months (Jun, Jul, Aug) and some factories loss about a month production in Q1. If full vaccination would be able to prevent this in future, I foresee quarterly EPS to normalise to around 15 sen per share due to raising demand for wood furniture in the US. Don't forget that Liihen is still in expansion mode even if under pandemic. For this particular stock at the present, I couldn't figure a better time to buy it, for a handsome capital return when she announces next quarter earning after CNY 2022.

Is Able Global selling any dairy product in Malaysia?

Davidkkw79, you should have sold it just after MCO 3.0 was announced. But if you have held it until now, it is better to continue to hold it because the business has returned to full swing since Sep 2021.

Pricing of the warrant plus weaker quarter earning drive the price down...

@Cipta, this can be achieved only by getting permit to bring in more foreign workers.

@Teosoontong. Main source of raw material is from local suppliers, not its rubber plantation subsidiary. You can check the segmental reporting in quarter or annual report to verify this. The raw material cost can be transferred but may not be at 100% efficiency and it takes time.

If you are still worrying perhaps you should look for other stock that suits your profile better. It is not good to hold any share you do not feel safe about it.

This share is a growth stock + turnaround (from temporary issues). Growth stock generally gives you long term return and turnaround gives you short term return. With these two combined, you can expect a medium return at low risk in within a year. I don't think there would be any buying opportunity for this stock if it is without temporary steep drop of revenue and profit due to MCO 3.0.

@Thirai - What you feel is very normal if you just look at the surface of the number alone that happened 5 to 2 months ago because it is not a nice figure. However, to see beyond this or to be able to see the future, you need to digest this figure with OTHER INFORMATION. By checking the quarter result in MCO 1.0 and how the earning recovered after that would help you to understand. You may be able to observe that the company is now coping with MCO 3.0 in a lot more effective way to reduce the impact and also you may be able to see that the shock level to the shareholders is a lot less from how the share price curve changed.

80% of the profit comes from market in Malaysia. Contribution from Vietnam is only 20%.

Spread of Covid-19 and MCOs etc. will change the timing of motorcycle production and therefore the transaction but not reducing the demand (the demand should be increasing instead). Therefore recovery would be strong and quick.

Very likely result is already good in Oct and Nov so that the management made a statement where "barring any further MCO, result for FY 2022 will be satisfactory". Furthermore, in general, Malaysian's income has reduced in the past two years and many M40 has now fallen into B40. These people are then motivated to opt for a cheaper mode of transportation which is motorcycle instead of car, due to affordability and the need to rebuild their emergency fund. Lesser disposable income will also encourage them to save recurring fuel and maintenance expenses which can only be feasibly achieved by choosing motorcycles.

Hi CWC1981, Sonos' order is placed to FPI through Wistron. However, I do not know how much of the total order is allocated to FPI.

I beg to be differ. This 2022 Q1 result is far better than what I predicted. With this result I'm a lot more confident that HLIND will achieve RM 0.90 to RM 1.00 annual EPS for FY 2022. If this is real share price will have very good chance to go up to RM 11.00 or higher by end of FY 2022.

Look around other stocks of matured business which could fetch EPS more than RM 1 annually, their share price is around RM 14. So it is quite conservative to predict HLIND to achieve RM 11 or higher when its EPS normalizes to RM 1 or higher annually.

It is unreasonable for the market to price HLIND at least RM 2 lower than its fair value just because of this expected -10 sen quarter EPS as a result of MCO. The money is yours to grab, as much as you need, to buy at current price and wait for 15 to 20% appreciation in 4 months time.

My forecast for HLIND Q1 result: -10 sen :)

Furniture is one of the industries that is expected to turnaround in Q4. Poor result is expected for Q3 due to plant shutdown during MCO. I believe deep pocket investors are aiming for this opportunity as well. What are they waiting for? When inexperienced investors are panic to sell after seeing the Q3 result that is to be released soon because they had not weigh-in the damage of MCO inflicted on the Q3 result, that is the best time for these smart money to take a good position. However, if the fear isn't great enough to motivate a sell down, I believe these smart money will eventually loose patience and starts to flow in by December, otherwise they will miss the chances to buy low.

While US might be reducing the import tax, it is more likely to happen in staggering rather than total cancellation. Furniture industry is still a labor intensive industry and don't forget that wages in China is no longer cheap. Risk of investment should be quite low at RM 3 per share. Even if the business could not recover to the result achieved in 2019, the performance that it requires for the share price to appreciate to RM 3.60 level in early 2022 should be a low hanging fruit to reap. In short, "low risk and moderate / high reward" is what I could think of for Liihen shares at its current price.

There might be back log in Q3 due to MCO but one of the main customers commented that Malaysia factory is recovering better than expected. Actually, most of the FPI's customers feel that demand for audio electronics are still very strong. Some even got positive response from stock market where they are listed when they increase the selling price of their product recently. So the worse thing could be Q3 profit not as good as Q2 but is still delivering decent profit and Q4 will be the best ever quarter that we have not seen before. Don't forget that Sonos plan to double their size by year 2024. Check this out: https://www.bloomberg.com/news/articles/2021-03-09/sonos-targets-annual-revenue-growth-to-2-25-billion-by-2024 Therefore be far sighted if you are really investing into fundamentals and long-term gain.

Hiring 100 operators and expanding...