Homeriz-wa is severely undervalued and this is why investors is chasing for WA now. Company purchased a land for which is nearby the existing production factory, clearly this land is meant for production expansion. So to look at reason production expansion is either more orders coming in and current capacity cannot cope or new contracts expected to receive and they need more production space.
in long run, warrant is good investment tools as in view of the future company expansion plan and business growing trend. Assuming share price to hit RM1.60 in Year2016, the warrant price should stand at ~RM1.00, which offers another 100% growth for investors.
Beza 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
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....
Invest123
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Posted by Invest123 > 2015-07-15 21:08 | Report Abuse
Well done. Thanks.