The average historical PE of Homeritz Corp approx. 7 times...if you take the current EPS of 10 cents (source: KLSE screener apps) multiply by the average PE is about RM0.70 and adds the current net operating cashflow per share of RM0.17. Hence, the intrinsic value would be RM0.88. When compare against current share price is slightly overvalued.
In my opinion, Homeritz valuation is at its historical high. Plus, when you compare the current PE against other companies like Lii Hen, Latitude Tree, Hevea & Poh Huat...Homeritz PE are the highest among them.
Results Homeritz’s 9MFY16 revenue of RM123.64m (+14% yoy) was translated into Adj PATAMI of RM23.28m (+47% yoy). This came in above our expectation, which accounted for 86% of HLIB full year estimate. Deviations We deem the earnings above our expectations. The deviation is mainly caused by stronger US$ vs our assumption of RM3.80/US$. Dividends A first interim single tier tax-exempt of 2.0 sen was declared in 3Q. Highlights 9MFY16 review… Homeritz registered a higher revenue of RM123.64m (up by 14% yoy) while PATAMI improved by 42% yoy (from RM12.9m to RM22.5m) mainly due to strong US$ against MYR and higher sales volume. 3QFY16 review… Although the company recorded a 9% yoy increase in revenue to RM40.5m, qoq basis revenue dropped by 5%. PATAMI weakened sequentially to RM6.2m (-20% qoq) due mainly to higher labour cost, slightly lower sales volume (-4% qoq) and weaker USD against MYR (- 6% qoq) Our house projected a weakening bias in MYR within the range of RM4.00-4.20. Our sensitivity analysis shows that every RM0.10/US$ depreciation in ringgit will boost net profit by circa 7%. Risks USD weakness against RM; high raw material prices; high labour costs; unexpected economic downturn; and production or operational risks. Forecasts FY16-17 net profit forecast is raised by 15.5% and 8.3% to RM31.2m and RM29.2m to reflect our latest MYR assumption of RM4.00/US$ and RM3.90/US$ respectively for FY16 & FY17 (vs. RM3.80 previously) Rating Maintain BUY, TP: RM1.09 Positives: 1) the company would benefit from strong US$; (2) lower leather price which will boost its margin; (3FY16 DY of 5.9%, based on 50% payout ratio. Valuation We maintain our BUY recommendation with a higher target price of RM1.09 (previously RM1.01) after incorporating latest forecasts based on unchanged P/E multiple of 11x of CY17 EPS. Source: Hong Leong Investment Bank Research - 29 Jul 2016
This Q3 gives 2 cents dividends. Expecting 3 cents dividends in Q4. That brings in 5 cents dividends in total. That means > 5.5% dividends at this price RM0.90.
You can exit and buy something more interesting or you can accumulate if you are convinced with the facts. Its a choice. The most exciting place I know to make money is in the casino.
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....
CaiShenYe
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Posted by CaiShenYe > 2016-08-03 10:01 | Report Abuse
1.15-1.20 in three months time