The shortage of foreign workers had affected the performance. The reduction in manpower stemming from the government's decision to temporarily freeze the intake of foreign workers for all sectors. 尤其对家具业、种植业、园丘和制造业影响尤其大。
Q4 profit dropped, but overall this year result is better than last year. Balance sheet looks healthy most importantly is debt settled. Can consider top up further if price goes lower.
According to HLIB research, Homeritz requires skilled foreign workers to manufacture its products. However, the government’s decision to temporarily freeze the intake of foreign workers in Feb 2016 has caused a shortage in their manpower. The company has recently managed to secure the approval to hire and bring in foreign workers which will allow the company to recover its production output especially with new capacity expected to come in by next year. Thus, the research house expect sales volume to recover and EBITDA margin to normalize gradually in FY17.
Homeritz Corporation - FY16 Results ? Below Expectations Author: kltrader | Publish date: Fri, 28 Oct 2016, 09:52 AM
Results Homeritz’s 4QFY16 revenue of RM33.9m was translated into PATAMI of RM4.6m. This brought FY16 Core PATAMI to RM27.6m, accounting for 88.5% of our full year estimate. Deviations Lower than expected production volume and margin due to shortage of foreign labour. Dividends A final single tier tax-exempt dividend of 3.0 sen was declared in 4Q. Highlights Yoy: Homeritz’s FY16 revenue increased 8% yoy to RM157.6m mainly contributed by stronger US$ against MYR. Consequently, PATAMI improved by 19% yoy due to stronger US$ against MYR and lower leather cost despite a higher labour cost (circa 12% yoy) and a reduction in sales volume (-1% yoy). QoQ: 4QFY16 revenue experienced a double digit contraction, recording RM33.9m (-16.2% qoq) caused by a 14.9% decline in volume sold. This is mainly attributed by the shortage in foreign manpower which has also reduced EBITDA margin by 7%-pts qoq. Consequently, PATAMI weakened to RM4.6m (-29% qoq). Outlook: Homeritz requires skilled foreign workers to manufacture its products. However, the government’s decision to temporarily freeze the intake of foreign workers in Feb 2016 has caused a shortage in their manpower. The company has recently managed to secure the approval to hire and bring in foreign workers which will allow the company to recover its production output especially with new capacity expected to come in by next year. Thus, we expect sales volume to recover and EBITDA margin to normalize gradually in FY17. Risks USD weakness against RM; high raw material prices; high labour costs; unexpected economic downturn; and production or operational risks. Forecasts FY17-18 net profit forecasts are reduced by 3% and 1% respectively. Rating BUY (↔), TP: RM1.06 ↑
Despite the unexpected blip in manpower which resulted in lower volume production, we expect the company to recover its output with the recent approval to bring in foreign labour. Homeritz also benefits from recent ringgit weakness against US$. Valuation We maintain our BUY recommendation with a lower target price ofRM1.06 (previously RM1.09) after incorporating latest forecasts based on unchanged P/E multiple of 11x of CY17 EPS. Source: Hong Leong Investment Bank Research - 28 Oct 2016
Market overreact for the quarter released. this morning just finished my bullet to top up Gadang. No fund available for a while to buy more Homeriz shares..
No worry with this counter Good result compared to last year Revenue = increase / Profit = Increase / Borrowing = reduce / Liabilities = reduce / Cash flow = increase / Net cash = increase / good dividend / USD strenghten
i agree with SmartInvestor1... no doubt Homeriz is a good company, but due to poor BolehLand government policy to take in foreign workers, and also the increase of raw materials cost (stated in the above link)... Homeriz will have more headwinds in the upcoming results... I expect poor results to continue in next few quarters... can only buy later when the price drops more... but not now...
Homeriz net profit has been dropping for 3 consecutive quarters... and i expect it will drop further / remain flat for the upcoming quarters if the foreign workers issue is not resolved...
actually they have abundance of cash, they can go explore other countries like vietnam to ramp up production. Their cash ALONE is 5 times their TOTAL LIABILITIES if i am not mistaken. I would prefer if the company pays out more special dividends. Otherwise, really do massive expansion. Their revenue/size still really small compared to other furniture makers.
Good company will not simply expand their business without proper plan. They are waiting the chance, when the time coming, Homeritz will fly with no doubt.
guys, u all have a point up there.. but if the issue with foreign workers in-take cannot be resolved, it is going to adversely impact Homeriz for the next few quarters... we can see that the net profit had dropped for 3 consecutive quarters and it is the worst in the latest quarter as the management mentioned that they lacked resources to manufacture... i saw someone mentioned that this resource shortages issue has been resolved but can someone provide some proof to confirm? thanks...
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muscular
280 posts
Posted by muscular > 2016-10-27 21:41 |
Post removed.Why?