The true value of a stock does not change much from year to year. That is also the case for this industry.
Dig into the business to understand what drives the numbers and how those numbers drives valuation. When the market sentiment is awash with currency horror & excitement, understand how the business is creating value is the only thing you can anchor on. What really matters in the end is how the business adds value, not what the conversion rate is.
Based on the analysis above, homeriz seems to be on par/slightly better compared to the rest of the competitor but why this counter couldn't go up/on par with those competitor?
No offense Ricky, just to add: Numbers do not necessary paint everything. One has to look at both quantitative and qualitative analysis. For example, some companies have not been doing well in some years due to macro changes, not the business itself:
"We took a long term major USD loan to finance the expansion, but were unfortunately hit with the 2008/2009 financial crisis soon after that and were forced to restructure our loan facilities. We were saddled with high financial costs and repayment obligations and had to operate under an extremely tight cash flow regime."
I always liked Icon's articles because he focuses precisely on both.
And also, I would suggest it's better to add CFFO / FCF in the article if you really want to do a comparison. This eliminates forex gain / loss and can give a clearer picture.
Regardless, well done. Keep up with the good work.
Hevea and homeritz are very close in terms of valuation, FCF/price and CROIC.... just that homeritz is in a better business compare with Hevea. This is my opinion.
As making investment in stock market, one must think like a businessman. Doing all possible studies & analysis to know where the market & money are as well as the risks & competitions of the businesses.
Forex is part of business factors which all export companies can't avoid to consider when making business decision. Same should apply to investment decision by considering the short & long term effects from the fluctuation of RM.
After all, you need to make a choice based on your available funds & personal preference & risk stomach.
To buy or not to buy. If to buy, which is the better one to invest.
Please remember, buying a good company at high price may not be a good investment.
However, I do agree that a good management with good business should be able to contain the risk of forex fluctuation.
So, when all seem like also good, then one should consider is the quality of the management. Is the company rewarding its shareholders by giving out consistent dividends over the past years?
Dividend policy & payout will be my main consideration when making my investment decision in selecting furniture/export stocks.
haha using profit margin to say that the company is better than another company? Not really a good measure.
Let say company A earning revenue RM1 but earn RM0.25 compare to a company which have RM10 revenue and profit RM2. Isnt it company A better? Profit margin not a best thing to measure a company.
Asset turnover not a good measure? Why say the asset inflated by currency. All of the furniture company balance sheet have been inflated, not only homeriz. Then why u say it is not a fair comparison? Because homeriz lower than other furniture company? then it is not a good measurement?
Few things to consider/determine: 1. Is the company earnings moving to higher levels - next couple of years (due to sustainable structure competitiveness advantage) 2. Did the share price already OUTRUN the fundamental due to sentiment.
pingdan, if company A and B running the same type of business, then obviously company A is better. But more important is how much of profit can be generated from invested capital (ROIC). In my opinion, that will be a better benchmark than ROE.
Sosfinance, that's the thing, everyone talk about rate/margin/%/return, how about future business progress. Anyone has better insider business vision on future export prospect?
ricky yeo, i dun think profit margin is the only way. if let say company b is grow faster than company a although the profit margin is slightly lower than company A, i disagree with you point. but if both company is grow in the same pace, yes company b is better than company.
Another more thing to consider is share price. if a company with high profit margin is far far way expensive then another company, i will choose another company with lower margin. So many things to consider before buying a share.
Hevea vs Homeriz vs Liihen. Is nature of business/core business as important or more important than financial analysis in fundamental analysis? Based on the above article, Hevea is ....
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Posted by probability > 2016-05-20 23:45 | Report Abuse
very interesting Ricky...good to have analytical minds like you in i3.