Hope to receive 25 sen capital repayment.

iv) parking space are limited, and is difficult to accomodate more and more cars, so that's another reason for more usage of motorcycles

Why I believe the motorcycle market in Malaysia will remain strong in 2023:
i) the approval of additional 500,000 foreign worker to work in Malaysia in 2023
ii) FDI - new setup of factories lots of factories move out from China and relocate in SEA due to US-China trade war, this will provide more jobs and that's one of the reasons why unemployment rate in Malaysia remains low despite all the headwinds. These factories usually pay decent salary and premium branded motorcycles will be very affordable for them.
iii) Congestion in big cities in Malaysia such as KL, JB etc are getting more serious than pre-Covid time. Motorcycles will help the well paid employees to arrive at work destination faster.

Hi HamburgerOS, 2 reasons, perhaps:
i) Motorcycle sales of Malaysia decline in Apr. But that should be normal as normally sales decline in the month when people celebrate Aidilfitri. Why? Because supply is usually limited in that month due to less production day in the factory. Another reason is a lot of people need to reserve their money to celebrate the festival. Therefore sales usually bounce back after that month but investors would like to wait to verify that there is no exception for this year as there are lots of headwinds this year due to inflation and rising interest rate, recession in US or EU etc.
ii) Many may not feel comfortable of large investment in tile manufacturing industry because they believe high interest rate will slow down property market which in turn will dent the demand for tiles.
Therefore, I think it takes two stages for the share price to grow from now. First stage will be achieved after resillient demand on motorcycles starts from May is observed. 2nd stage is when the tile manufacturing shows very positive contribution starts from 2025 when the new plant is completed.
However, it may be a lot simpler than it sounds. As long as the EPS could achieve close to RM 1, or close to 25 sen per quarter, then I think the share price will quickly reach somewhere close to RM 10. I think that's not too difficult to achieve because the actual earning in Q1 is already close to 25 sen excluding the impairment due to demolish of old tile plant building. Plastic and aluminum price (the main raw material for motorcycle) are already peaked and become less expensive in Q2 and this trend is likely to continue because crude oil and natural gas are both in down trend. What do you think?

Hi Alexnada, Guoco and Guocera linked to the same big boss, Mr. Quek. If I were the big boss, I will have 2 considerations here:
1. buy the tiles of the same quality at best price
2. buy from related company otherwise I'll be feeding competitors to fight against Guocera which I have substantial interest
So what would I do? Take the opportunity to upgrade Guocera so that it could produce higher quality tiles at lower cost. This will benefit Guoco land to get excellent tiles with reasonable price, at the same time provide return for investment to Guocera. If Guocera could not provide good quality tile at competitive price, then I will not spend 400 mil in Guocera, instead I'll slowly give up this business and get the tile supply from White Horse, Niro, etc. Make sense?

Next Q earning 31.9 sen excluding hedging loss/gain. If include hedging loss/gain will be better than 31.9 sen. Continue to see unusual large profit from refinery sector.

By 2024 Ukraine war should have ended and will be a tile magnet at that time. This will cause Europe's tile price to increase and Malaysia's tile to gain pricing power in 2024. Although new house build is slowing down, most of the consumption in recent years are actually from renovation of existing buildings. Therefore the slow down in construction does not mean total demand for tiles is shrinking.

Total floor area 450,000 sqf. Assuming tile-able wall to floor ratio is 4:1, then
Total tile value = 450,000 * (4+1) * 7 *3.3 = RM 51,975,000 which is 2.1% revenue of HLIND or 21% revenue of Guocera in year 2022.
Assumptions:
1) Unit tile value = SGD 7 / sqf
2) SGD exchange rate 3.3
If more luxurious tiles are used then it could reach 30% of Guocera's revenue in 2022.

10% is conservative estimation. I think more expensive tiles will be used because the value of the building is already above 2k SGD psf.

https://www.edgeprop.sg/property-news/bugis-enters-new-chapter-ongoing-rejuvenation
I think this complex will consume 10% output from Guocera after the new plant has completed.

Hi Observatory, well said. Just learned something from you that some stocks in Bursa are approved for short selling. Is there any website / source that I could refer to learn short selling in Bursa? Thanks.

These are all my questions waiting for more brilliant kaki to analyse and share. I'm not smart enough.

And I think he did it this way is like slapping Mr. S on his face because he will definitely face lots of questions in the AGM 2 days later. Who can tolerate this?

Wkchia, that person must have less than 3.5 mil shares to sell. You think who's that person?

Hi wkchia71, did all members resign? But I suspect insider sold shares before announcement. And that person must go if discovered. But I don't know who's that person.

Monetary, everything is projection. What u hold now is also based on someone's projection or your own projection, from the result in the past or information collected, to be fair.

These customers' report help you to understand what the acting chairman said in the AGM. If you pay attention you catch the info.

Take from Yamaha FY2023.3 report's Q&A:

"We also see that sales of guitars can grow. In North America, sales of wind instruments grew substantially in the previous fiscal year..." "In our view, we will be able to sustain strong sales, as the market inventories of entry-level digital musical instruments and guitars become more appropriate. We also expect supply of audio equipment to recover as the semiconductor procurement difficulties are being removed, and we anticipate growth in both regions (North America & Europe)."

In above statement "the market inventories become more appropriate" means dealer's stock has reduced, and therefore Yamaha could replenish order from supplier. You can see accelerated guitar catalyst order starts from Mar this year. Don't just focus on number of shipment but take note the weight of the shipment. The inventory problem that Mr. Shih mentioned in AGM refers to customers' dealer stock in case you don't undertand. It is not referring to FPI's inventory. Yamaha contribute slightly below 10% of FPI revenue and is growing.

Reference: https://www.yamaha.com/en/ir/presentations/qa_202305/

Turn to page 11. "Expect to return to the normal growth trajectory in 2H of 2023 onward". Due to covid new product release was impacted. New product / game changer product release will be accelerated (page 17).

More than half of revenue of FPI comes from Roland. Ignore the temporary set back. New release of Roland's plan here. Check it out: https://ir.roland.com/en/ir/news/news-9042757612983161037/main/0/link/2023-2025MTP%20(EN).pdf

If can get at that price I also want to spend my other 2 bullets oh.

The price should be normal quarter EPS x historical average PE. In this case we should not take unusually low or high quarter. Being conservative you can take rolling 4 quarter ahead. Q2 revenue will be higher than Q1 because of stronger USD and weaker plastic resin price and given more time for US customers to normalise their stock level. Receivables in Q1 are in USD will be appreciated as well and appear as forex gain in Q2. Large part of short-term fund are held in the form of USD will be a gain too. The interest income will increase as well for both cash in USD and in RM because of interest hike. Beside that FPI will also receive rental income from Roland. Therefore EPS will be Q3 & Q4 greater than Q2, while Q2 EPS will be greater than Q1. This should be generally right. It is impossible to project very accurately but I think 20 sen per share for FY2023 is a reasonable estimation. And I guess that's the reason only 21 sen dividend was declared for FY2022 because this is the sustainable amount.

And ya, if you run out of patience you can submit your shares at 2.35. I think FPI is happy to buy back.

To understand more about the pace of customer placing order, read Roland's, Yamaha's, and Sony's report, their explanation on inventory management, sales forecast, trade payables to suppliers etc.

Please take note of increasing large shipment to Yamaha guitar starts from Mar this year. It is 2x the normal month order. Yamaha was the 4th largest customer placing order slightly less than Wistron. It will appear as 3rd largest customer this year I think. As for Wistron project, there is a close work with Wistron to win more project as disclosed in the AGM. That's the reason why 10-20 mil capex is allocated to put focus on enhancing the plastic injection.

I encourage you all to attend next time and take your note... while some answers can be standard these are still important for you to know... have a nice weekend.

Mr. On X Hau asked about how long the current economy impact is going to last on FPI and weather or not the worst has passed. The answer given was "my answer is... it depends on market conditions that is still evolving... at the moment we still seeing headwinds from inflation and interest rate hike." After pausing for 3 sec he continues "we can see a slow recovery from the 2nd half of the year." It was a spot question, it was not projected on the screen. This happened about 36 minutes after meeting has started. I think this is one of the most important info in the AGM.

If customers want to replenish stock in Q3, then FPI order will increase in Q2 (2 months ahead, value chain from China to Malaysia to US).

I think Yamaha's report explains this too. You can find it out.

That explains the great increase of inventory turn, be it FPI or FPI's customers.

Also customers want to reduce inventory holding because financing cost will be high (due to high interest rate) plus delivery lead time already improved a lot. So customers no hastle to place order like last year. So you can see this will create a "vacuum" timezone in placing order.

This I got from customers' website: Customers are doing stock adjustment (order less) because they still have stock. But they observed the sell-through remain strong. Sell-through means end customers (consumers) buy away from retail stores. Therefore for order to become normal again it has to wait for some time for the stock in warehouse to go to normal level. Most of the customers expect this to take 2 Q, namely Q1 to Q2. Cheers.

Hi cwc1981, that's what I have sorted out. As a conclusion I think demand is suppressed at the moment, with USD go a lot stronger in Q2 the profit margin would be widened to partially offset the headwind. I think I would stop here as it is dinner time. :)

Excluding forex gain/loss, actual revenue in 2022 was 5% lower than 2021. I think this one everybody is able to find out, just some maths.

As for the headcount of workers, the reply was to keep them for optimum level of labour needs. As for machine capacity it is not currently at occupied at optimum level. CAPEX will be 10-20 mil this year for new business and other activities.

Someone asked about the lots of cash held in USD. The reply was to continue to keep in the form of USD in view of its yield etc.... Maybe good interest income due to high interest rate... if 5% per annum this will bring about 10 mil interest income per year. Someone can cross check the net exposure in USD (cash + short-term fund + receivables - payables). Higher parts of receivables in USD and higher payables in asian currencies including RM i think.

Mr. Shih said FPI had not lost any customer. And recovery expected in 2H (probably based on order on hand he said that).

Hi Monetary. It didn't go as I wish / thought.

Waiting for result...

But one thing I beg to differ: use Seair to predict result.

You know lah the Chairman... some answers need to use brain juice to peel the onion... haha.

But I tell you I'm still digesting because did not have time to read all yet ya...

And Dhando did a good and correct analysis on 2022 EPS.

And so far my stand remains.

If I can jump to conclusion I would say share price will be able to recover not too long. Busy to do detailed info processing...

OK OK. Let me have some time to tidy up the things.... the slides were really fast....

Hi Pinnacle, see my pm :)

Books and Gurus say don't grab sharp knife. Contradicted. Theories are easy and known by everyone. It is a lot harder to make money because you got to know when theories fail.

Warren Buffet said be greedy when others are fearful. I hope he's right this time. ^_^

Expecting a poorer yoy Q1 2023 result but current price has gone too far away from fair value. Actually most of FPI's customers only slightly adjust / reduce FY2023 revenue outlook. I estimate the revenue in Q1 2023 to be somewhere close to RM 200 mil by using various methods.