JayCorp construction is a very few local construction company in Sabah. Good for Sabah development as tender priority should be for local or local-joint companies.
You can exclude their construction division for the valuation purpose first since it still yet to contribute any profit to their results. The main revenue & profit contribution are still furniture making.
Doesnt look good if compared to their peers. Liihen, Pohuat, Homeritz and even Hevea all tumbled. If not for long term purpose, my advice is reduce your position at this counter first before quaterly result is out on June.
Jaycorp advantage compared to peers is they are involved into business diversification. From packaging carton box, rubberwood processing to furniture making, it helps them to mitigate unnecessary cost and control the pricing power to end customers.
Same as other furniture companies, strengthen RM/USD and high material costs bring down the profit margin. Disappointing is turnover registered lower and lower in the consecutive quarters. This is not in line with the business outlook stated on the AR FY2017 which the Group is in view that they can benefit from the China first drop in furniture exports as well as unfortunate natural disasters in the USA. If not the business strategies make some mistakes, then could be the internal production issue eg. inefficiencies on production and process, customer complaints and quality problem.
Hopefully, JC will monetise or capitalize the sabah premium land. East Msia should have more funds to develop now since they should be able to get 30% instead of 10% royalty fees from new gov.
A lot of opportunities reserved for the east Msia local companies. So, they should use that advantage to grow and try to be (construction) market leader there. Regardless industries and sectors, market leader is the best position unless you have special niche positioning in the market. There are other better furniture manufacturing competitors in Msia... I think JC should strengthen other divisions (e.g. carton box, bioenergy and construction) instead of being too dependent on furniture.
US plans to impose tarrif on USD200bil of Chinese products including furniture. That's possibility that other furniture making countries like Malaysia and Vietnam could benefit from the trade war?
Many many export-oriented stocks will see higher EPS QoQ lah. This is mainly due to forex gain in Apr-Jun quarter vs forex loss in Jan-Mar quarter. The forex loss turns to forex gain can make quite a difference.
Q4 result profit back to normalise with EPS 3.4 sen. Annual profit = 3.4 x 4 = 13.6 EPS multiple with 10 PER, fair value shall be 1.36. Share price still have rooms to go up if JayCorp can further boost export sales and improve cost efficiency.
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....
john doe
749 posts
Posted by john doe > 2018-04-12 17:18 | Report Abuse
This stock NOSH (137 million) is so small compared to others. Can easily goreng up once the shark collected enough...