Homeritz, a furniture export counter, doesn't benefit from the depreciation of Ringgit.....???
Group Increase/ (Decrease) 2015 2014 RM RM Effects on profit after tax USD - strengthened by 10% (291,106) 1,559,274
Euro - strengthened by 10% (8,131) 12,436
A weakening of the above currencies against Ringgit Malaysia at the reporting date would have had the equal but opposite effect on the above currencies to the amounts shown above, with all other variables held constant.
2) For major customer that with revenue >10%, it has reduced from 2014 of 3 to 2015 of ONLY 1
3) Forward foreign exchange contracts, increase from (2014) 807,450 to (2015) 18,710,590
Currency exposure of -3,881,410 (2015) against +20,790,307 (2014)..... GOOD/BAD???
Would that explain the recent fell of Homeritz share price??? We may not expect a good result from 2016 Q1......
Remember their cost of hides increase? So i think that is the reason the hedge the currency for debtor and raw. I view this as a prudent move from management.
"A weakening of the above currencies against Ringgit Malaysia at the reporting date would have had the equal but opposite effect on the above currencies to the amounts shown above, with all other variables held constant."
Particularly this: "but opposite effect on the above currencies to the amounts shown above"
And this reflect in their 2015 annual report (Page 73, item 33.a.i),
Effect on profit after tax,
2014: USD Strengthened by 10%; profit increase by 1,559,274
2015: USD Strengthened by 10%; profit DECREASE by 291,106
I think hedging is good cause this prevent Homeritz from any further risk of currency fluctuation, given that its cost of leather is in USD currency...furthermore, the currency loss of 200k per year due to hedging is really negligible for Homeritz which is earning millions of dollars per year!
Agreed. The loss is unrealized loss as at year ended. Furthermore, if maturity date still loss, the company can go market to exchange thus contra the loss. Thus can help company stable the profit margin.
USD/MYR close:4.39954 low:4.38230 high:4.42135 Net beneficiary of stronger USD against MYR. Based on our economist’s projection, MYR would remai n weak against US D. Hence, Homeritz’s FY16-17 earnings prospect remains bright as our MYR forecast is revised to RM3.80/US$ from RM3.60/US$. Moreover, sensitivity analysis shows that every RM0.10/US$ appreciation will boost FY16 net profit by circa 6%.
because those ppl at Pohuat, Hevea and Latitude all got trapped, got conned. now no money buy homeritz. never mind, we buy all the shares. then we HUAT.
Homeritz did not do well last quarter where everybody else benefit from the rise of the dollar..so logically, it should do well this quarter..a bit lagging in respond maybe
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Hotrod
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Posted by Hotrod > 2015-12-29 18:32 | Report Abuse
Just nice for CNY angpao ...