It is a matter of time before the Hevea WB will show a premium of 10 % over the mother's price. This will happen especially if the coming qtr result can show that its EPS is greater than 14 cents.

NP Jayd3 :-)

Its current price only RM1.49.

Another Hidden Gem. Like Hevea, Minho's EPS is getting very interesting. The last QTR1 EPS was 10 cents (on May 29 2015). http://www.bursamalaysia.com/market/listed-companies/company-announcements/4757577.
Thus the estimated whole year EPS = 4 X 10 cents = 40 cents.
Using the PE of 10, Minho's FairValue should be around RM4. If you can buy and hold it for a year, getting a return of more than 100 % is not a problem. Start collecting it now before more people are buying.

Another Hidden Gem. Like Hevea, its EPS is getting very interesting. The last QTR1 EPS was 10 cents (on May 29 2015). http://www.bursamalaysia.com/market/listed-companies/company-announcements/4757577.
Thus the estimated whole year EPS = 4 X 10 cents = 40 cents.
Using the PE of 10 its FairValue should be RM4. If you can buy and hold it for a year, getting a return of more than 100 % is not a problem. Start collecting it now before more people are buying.

Thanks OTB.

The Economy data for China and Japan which are Hevea's biggest export markets look good. The weakening RM is another plus factor for Hevea in longer run.
http://www.cnbc.com/id/102750445

http://www.cnbc.com/id/102746755

Thanks whichone. I managed to get some WB at 2.10 this morning. Fundamentally Hevea intrinsic value does not change with the short term volatility. With the estimated EPS of 56cents and with one year time frame in mind, the mother share and WB look very attractive at the current price.

Time to collect more.

I just wonder how many people can buy the mother at 3.52 and the WB at 2.36 and hold them for a year in order to see them appreciate to their FV slowly.
I guess life is not so simple if one needs a patient to buy a share and hold for a year.

Thanks GGMalaysia. Hevea's last qtr EPS was 14 cents when the RM exchange rate was around 3.5 to3.6. With the weakening ringgit and the rate hike in the US in the coming months, the exchange rate should be around 3.5 to 3.6 too or higher(>3.6) . Thus we can assume that the coming qtrs, the Hevea qtr EPS should be at least 14 cents too. Therefore the estimated whole year EPS should be 56 cents (14 X 4). Based on the PE of 10, its FV should be RM5.6 for the mother and RM4.6 for the WB. As the WB has 5 more years to go and should command a 10 % premium. Thus the FV for the WB should be around RM5.00. So based on the current price of the mother 3.52 and the WB price of 2.36, one can guess which will give a better retrun in longer run.

With nearly 5 year to go before the warrant expires, The Hevea WB should have at least 10 % premium over the mother by now which means its price should be at least 2.80 by now

So it probably means the coming BTM qtr report should be good.

http://klse.i3investor.com/blogs/kenangaresearch/74460.jsp

If you have not already own the warrant and you have a longer term view, I think it looks attractive to collect more at 1.92

Thanks OTB.

Hi Cocoon, these are what FA and TA stand for
FA = Fundamental Analysis .
TA = Technical Analysis (Charting Analysis)

For normal people like us who don't have the luxurious to trade based on privileged info have to do the FA in order to identify some stocks with good future EPS and growth. Thus we have to wait and hold. Trading is a luxurious item for us.

Since no one can really get the best timing when is the lowest price to buy a good stock(expect he is a genius or he/she has an insider info), one invests in a good stock when he sees a value in it and the price is fair (I think at 3.05 and PE of 9.95 and FY15 est EPS of 55 cents, it is fair to still buy for long term). Everyone has their own investing strategy and the buying depends on their own investing strategies (i.e. FA and TA) and risk appetites (i.e. speculation) . For example people who invest in SHH because they have their own strategies and reasons too (i.e the potential take over) even though its PE of 10.42 at 1.41 is slightly higher than Hevea.

I believe if you are a long term investor (can hold at least 1 year and beyond ) you will see the great value in Hevea http://www.theedgemarkets.com/my/article/heveaboard-acquire-shh-resources (its potential earning and growth - FY15 estimated(est) EPS =55cents, FY16 est EPS =66 cents and FY17 est EPS = 70 cents) and at RM3.05 its PE is 9.95 (http://www.malaysiastock.biz/Corporate-Infomation.aspx?type=A&value=H&source=M&securityCode=5095). When Warren Buffett buys a stock which he thinks has a good intrinsic value he will hold for at least 10 years. Look at his holding company's (Berkshire Hathaway - its latest price here http://finance.yahoo.com/q?s=BRK-A&ql=1) share price (216,000 USD per share and it costs 2.16 million USD per lot to buy). With a PE of 18, people are still buying. Why ? (look at its EPS figure)

http://www.theedgemarkets.com/my/article/heveaboard-acquire-shh-resources
Looking at the estimated EPS for Hevea from the Edge/CIMB extracts above,the (Earning per share)EPS for FY15 is 55 cents. The EPS for FY16 and FY17 are 66 cents and 70 cents respectively which are extremely impressive and attractive.
Based on PE of 10, the near term TP for Hevea should be at least RM5.5. Therefore people who can hold for at least 1.5 years should collect more as the TP for FY16 should be RM6.6 and TP for FY17 should be RM7.
Thus Hevea-WB in fact looks very attractive for long term investors. When the mother TP is RM7. TP for WB without the 15 % premium is RM6.
Thus you potentially can reap at least 300 % upside return if you buy at current WB price of RM2.19 and hold.

Hevea-WB. When the mother TP is RM7. TP for WB without the 15 % premium is RM6.
So if you are a longer term investor, you potentially can reap at least 300 % upside return if you buy at current WB price of RM2.19.

http://www.theedgemarkets.com/my/article/heveaboard-acquire-shh-resources
Looking at the estimated EPS for Hevea from the Edge/CIMB extracts above,the (Earning per share)EPS for FY15 is 55 cents. The EPS for FY16 and FY17 are 66 cents and 70 cents respectively which are extremely impressive and extractive.
Based on PE of 10, the near term TP for Hevea should be at least RM5.5. Therefore people who can hold for at least 1.5 years should collect more as the TP for FY16 should be RM6.6 and TP for FY17 should be RM7.

As the warrant has about 5 years before it expires thus it should command a 15% to 20 % premium over the mother in general. This certainly will happen if the Q1 EPS can be over 12 cents.
Thus the WB TP should be [(4.16 + (15 % X 4.16 = 0.62)) - 1.00] = RM3.78. Again if the Q1 EPS can be over 12 cents, the WB price will have very high chance to hit 3.16 by end of 2015 and in fact it should be close to 3.78.

As the potential takeover exercise involves share swap, imagine if you are the owner of the company would you like to see the shares to go down ?

According to Edge weekly, Hevea has a cash pile of 35.6 millions and short term borrowing of 27.3 million at the end of 2014. So the company can afford to gear up for the purchase of SHH.
According to the Corporate observers, the purchase of SHH will enable Hevea to expand its downstream operation such as manufacturing ready-to-assemble n trades wood panel-related products.
Thus I think this is a real win-win situation for Hevea. If the takeover exercise materialize, it should at least contribute a minimum of an extra 10 to 15 cents of EPS to Hevea eventually. So for a longer term investor, the dips in Hevea price should be a great opportunity to collect more Hevea.

Hope he can notice that Hevea's estimated 2016 EPS is 64 cents

As a long term player, hope Dr Yu can see the great earning potential in Hevea after imaspro.

Hevea's TP should be at least RM5.20 for longer term. The next qtr EPS should be greater than 13 cents.
Read this http://klse.i3investor.com/blogs/kianweiaritcles/73191.jsp

This a very interesting article extraction from the CIMB report (https://brokingrfs.cimb.com/HiNjpBAxwPOF6KbnE3hOINF-HE6EELMn2-eB5w0Kp_8nc4B2AOHjVBZy1noF8s1h1apJEw7v46w1.pdf )
====== CIMB Report content Extraction ==============================
Unlike many other sectors (such as electronics) which have US$ costs
associated with US$ revenues, Hevea (as a wood-based manufacturer) has all of its costs denominated in RM while 95% of revenues are US$-denominated. Thus, Hevea is a huge beneficiary of the weak ringgit and strong dollar. Our sensitivity analysis indicates that a 1% strengthening of the US$ increases Hevea’s EPS by 7.6%, which is the basis of our FY15 earnings forecast.
=====================================================================
We know that in the last quarter FA, hevea has to sustained an exchange loss because of the strengthening USD. But the better EPS increment due to the stronger USD will outweigh the exchange loss many times. See the potential EPS increments based on the CIMB's sensitivity analysis .
Since Dec 2014 ringgit has weaken from 3.50 to 3.70. So it has depreciated about 5.7 % so (5.7 % X 7.6 % = 43.32 % based on CIMB's sensitivity analysis from the above extraction) potentially its EPS will increase by a further 43 %.
With the pending US rate hike between Jun and Sep. The USD will get even stronger !!
http://www.thestar.com.my/Business/Business-News/2015/03/21/RM4-to-the-dollar-seen/?style=biz
If RM is weaken to 3.90 ( it has depreciated about 11.4 % from 3.50 so (11.4 % X 7.6 % = 86.64 % based on CIMB's sensitivity analysis from the above extraction ) potentially its EPS will increase by a further 86.64 %

Pohuat's latest qtr EPS is 7.66 so the conservative estimated full year EPS should be 4 X 7.66 = 30.64 cents. AS US and Europe market are recovering well and the USD will get stronger due to the coming US rate hike, its full year EPS should be much higher than 30.64 cents.
Thus is fair value and TP based on the PE of 10 should be minimum at RM3.10

Pohuat's latest qtr EPS is 7.66 cents.
Here is an extraction from the Edge market web site
For its first quarter ended Jan 31, Poh Huat (fundamental: 2.1; valuation: 2.4) posted a 29.5% increase in its net profit to RM8.2 million, from RM6.3 million a year ago, in line with the higher turnover recorded during the quarter.

"The better bottom-line performance was mainly attributable to the consistent operational improvements in the Malaysian operations, which has successfully launched new ranges of office furniture.

"This, together with the stronger US dollar, has resulted in a significant turnaround profit of RM4.05 million, compared to a profit of RM1.50 million in the previous corresponding quarter," it said.

Revenue increased 10% to RM105.1 million, from RM95.5 million previously, with Malaysian operations recording strong shipments of office furniture to the Canadian market, while the Vietnamese operations focused on shipment of home furniture to the US market.

95% of Hevea costs are ringgit based and all its revenue is USD based. Looking at the Top Glove's just announced results, it should give us confidence that the coming Hevea qtr report will be very interesting and great.
(Even though Top Glove is in the rubber glove sector but its costs and revenue base structures should be quite similar to Hevea )

**********************************************************************
Top Glove Corp Bhd's net profit for the second quarter ended Feb 28, 2015 (2QFY15) rose 35% from a year earlier as higher sales volume and a weaker ringgit versus the US dollar supported revenue growth.

In a filing with Bursa today, Top Glove (fundamental: 2.5; valuation: 0.9), the world's largest rubber glove producer in terms of output, said net profit rose to RM56.07 million in 2QFY15 from RM41.55 million. Revenue was higher at RM572.25 million versus RM548.27 million.

"Contributing to stronger revenue figures was growth in sales quantity of 5.3% from 2QFY14 and 4.5% against 1HFY14, attributable to higher sales volume stemming from more natural rubber and nitrile glove sales.

"A stronger USD also positively impacted revenue and performance, and coupled with lower raw material prices, helped offset last year's tariff increases, part of which Top Glove was unable to pass on to customers," Top Glove said.
**********************************************************************

Another interesting point from the CIMB report (pls see under the heading Rising demand from China/Japan) is the Hevea's customer base in China is growing at a rate of nearly 50% per annum !!
This is another great reason why the longer term investors should have it.

https://brokingrfs.cimb.com/HiNjpBAxwPOF6KbnE3hOINF-HE6EELMn2-eB5w0Kp_8nc4B2AOHjVBZy1noF8s1h1apJEw7v46w1.pdf

Since the WB will only expire in 2020, it should command a 15% to 20% premium. Thus when the mother has the TP of 4.16, the WB should be over rm3.50 at least with the 15% premium attached.

If it breaks 2.87 it becomes an uncharted area. New higher high.

Thanks Joel. Neat and clear to the points.

This a very interesting article extraction from the CIMB report (https://brokingrfs.cimb.com/HiNjpBAxwPOF6KbnE3hOINF-HE6EELMn2-eB5w0Kp_8nc4B2AOHjVBZy1noF8s1h1apJEw7v46w1.pdf )
Unlike many other sectors (such as electronics) which have US$ costs
associated with US$ revenues, Hevea (as a wood-based manufacturer) has all of its costs denominated in RM while 95% of revenues are US$-denominated. Thus, Hevea is a huge beneficiary of the weak ringgit and strong dollar. Our sensitivity analysis indicates that a 1% strengthening of the US$ increases Hevea’s EPS by 7.6%, which is the basis of our FY15 earnings forecast.

------------------------------------------------------
Since Dec 2014 ringgit has weaken from 3.50 to 3.70 so it has depreciated about 5.7 % so (5.7 % X 7.6 % = 43.32 % based on CIMB's sensitivity analysis from the above extraction) potentially its EPS will increase by a further 43 %. Thus its coming qtr earning report and the next qtr earning report should be very interesting

With the pending US rate hike between Jun and Sep. The USD will get even stronger !!

With the pending US rate hike between Jun and Sep. The USD will get even stronger !!

This a very interesting extract from the CIMB report (https://brokingrfs.cimb.com/HiNjpBAxwPOF6KbnE3hOINF-HE6EELMn2-eB5w0Kp_8nc4B2AOHjVBZy1noF8s1h1apJEw7v46w1.pdf )
Unlike many other sectors (such as electronics) which have US$ costs
associated with US$ revenues, Hevea (as a wood-based manufacturer) has all of its costs denominated in RM while 95% of revenues are US$-denominated. Thus, Hevea is a huge beneficiary of the weak ringgit and strong dollar. Our sensitivity analysis indicates that a 1% strengthening of the US$ increases Hevea’s EPS by 7.6%, which is the basis of our FY15 earnings forecast.

Since Dec 2014 ringgit has weaken from 3.50 to 3.70 so it has depreciated about 5.7 % so (5.7 X 7.6 = 43.32 % based on CIMB above extraction) potentially its EPS will increase by a further 43 %. Thus its coming qtr earning report and the next qtr earning report should be very interesting

Same with OTB, Hevea-WB is my favourite too. See my previous extract from the page 175. If one can hold it for one to two years. It even has a potential return of over 300 %. This is because the estimated Hevea EPS for FY15 and FY16 are very impressive which are 54 cents and 64cents respectively.



Posted by ykinvestor > Feb 28, 2015 07:24 PM | Report Abuse X

Why Hevea-WB warrant is such a great value to buy and keep it !!
----------------------------------------------------------------
This CIMB report link shows, the Hevea EPS for FY15 and FY16 are 54 cents amd 64cents which are excellent for people with longer term view in investing.
https://brokingrfs.cimb.com/HiNjpBAxwPOF6KbnE3hOINF-HE6EELMn2-eB5w0Kp_8nc4B2AOHjVBZy1noF8s1h1apJEw7v46w1.pdf
Based on PE of 10 the Fair Value (FV) for the mother Hevea share should be RM 5.4 (EPS 54 cents) and RM 6.4 (EPS 64cents) respectively.
I am sure when other brokerage houses start realizing the great potential earning of Hevea and Latitud have, they will start applying the PE of
at least 13 to the furniture sector.
If we use PE of 13, the the Fair Value (FV) for Hevea should be RM 7.03 (EPS 54 cents) and RM 8.3 (EPS 64cents) respectively.
Since the Hevea-WB warrant only expires in 2020 and has a conversion price of RM1.00, I would say that leverage on the warrant would be a much better
buy. As the current price for Hevea-WB is around RM1.82, the warrant has the potential upside return of 300% to 380% if you can keep the warrant for 1 to 2 years.
Please do your own research too on the warrant and make your own final decision before buying it.

Thanks JCW

Hi Oregami, If one is a longer term investor, they will see the dip as the buying opportunities for a good stock with great growth and EPS. So the short term volatility does not change Hevea's intrinsic value. Those buying it now will get rewarded nicely by the next 2 to 3 qtrs.
At current price of 2.55, it's PE is only 8.3. cheap and attractive.

Interesting observation. Stocks like homeriz and pohuat (236/22.3[latest EPS) are already having the PE of over 10.5 at their current price.
So based on the PE of 10.5, Hevea's current price should be RM3.21 by Now !!

With such impressive estimated FY15 EPS and FY16 EPS of 54 cents and 64cents respectively for Hevea. See this CIMB report link :- https://brokingrfs.cimb.com/HiNjpBAxwPOF6KbnE3hOINF-HE6EELMn2-eB5w0Kp_8nc4B2AOHjVBZy1noF8s1h1apJEw7v46w1.pdf
Those with longer term view, if they start collecting the mother and the warrant shares of Hevea, they will certainly be rewarded nicely.

hi Joel, its PE = 268/30.65 cents(its latest EPS) = 8.74

If you look at Latitud, its EPS is around 60 cents and its share price has already over RM 6. So if you look beyond another 2 to 3 qtrs. for Hevea, it should be another Latitud. Thus Hevea's price should be around RM6 too (FY EPS of 54 cents). Therefore Hevea-WB should even perform much better than the mother.

Why Hevea-WB warrant is such a great value to buy and keep it !!
----------------------------------------------------------------
This CIMB report link shows, the Hevea EPS for FY15 and FY16 are 54 cents amd 64cents which are excellent for people with longer term view in investing.
https://brokingrfs.cimb.com/HiNjpBAxwPOF6KbnE3hOINF-HE6EELMn2-eB5w0Kp_8nc4B2AOHjVBZy1noF8s1h1apJEw7v46w1.pdf
Based on PE of 10 the Fair Value (FV) for the mother Hevea share should be RM 5.4 (EPS 54 cents) and RM 6.4 (EPS 64cents) respectively.
I am sure when other brokerage houses start realizing the great potential earning of Hevea and Latitud have, they will start applying the PE of
at least 13 to the furniture sector.
If we use PE of 13, the the Fair Value (FV) for Hevea should be RM 7.03 (EPS 54 cents) and RM 8.3 (EPS 64cents) respectively.
Since the Hevea-WB warrant only expires in 2020 and has a conversion price of RM1.00, I would say that leverage on the warrant would be a much better
buy. As the current price for Hevea-WB is around RM1.82, the warrant has the potential upside return of 300% to 380% if you can keep the warrant for 1 to 2 years.
Please do your own research too on the warrant and make your own final decision before buying it.

EPS of 30.65 for FY14 is great. The stronger USD contribution should be reflected in the next Qtr report.
So I would say FY15 EPS can be easily 36 to 40 cents. So people with longer term view should collect more on dips if any.

As the son is active , does it mean people expect the mother to hit 0.46/0.48 soon

looks like the Bornoil-WB warrant a much better buy