Alamak, you have a very good point, I went in too early. However, based on FLBHD profitability comparing with lumber prices, lumber prices need to drop by more than half from current level to effect FLBHD profitability/dividends. Last few days, I believe is more general panic selling in reaction to interest rate hike.
Yes, I have held FLBHD shares for many years. Am hoping this financial year will have same amount of dividend as in 2018 of RM0.16 per share, hopefully better. That time lumber averaged at abouts $500~$600. Quarter 1 2022, should record best profit ever and next quarter maybe 3rd best after 2021 Quarter 4. Last few days lumber has come down. But still high compared to historical levels.
Based on the North America lumber market outlook report, housing starts, which is a primary driver of lumber demand and selling price is expected to continue growing in year 2022. Thus, we expect that market price for wood products is sustainable in current year based on the US consumption of lumber as well as continued supply-side constraints due to its logistic issue and also Russia-Ukraine conflict. However, costs of raw material and other components are increasing in current year due to increased oil price. Besides, revision of minimum wage effective from 1 May 2022 would increase our production costs by approximately 4%. The impact of the increasing production cost can be minimised if we are able to increase our production volume through the employment of more workers. However, the current selling price of plywood, without taking into consideration of the recent strengthening of US dollar, is able to absorb the increase of the production costs. Based on the current operating environment, the Board of Directors is confident that the Group will achieve a new height in year 2022.
If without the logistic issues, the profit and revenue will be much higher. Because there was no available bulk carrier delivering the plywood to US in February and March 2022 while availability of container shipping was limited as well.
I wish they reduce the investment in money market fund and give us a special dividen. Afterall, the return of money market fund is very low although it has very low risk. IMO it is better return these money to shareholders.
Currently, FLB has pending orders (until 3Q) with locked in plywood prices hovering near record high. Going into 2QFY22, we believe FLB will likely post stronger QoQ earnings on the back of (i) sustaining or slightly stronger GP margin; (ii) delayed revenue recognition from 1QFY22, and (iii) higher plywood realized price amid rising geopolitical tension.
We raise FLB’s FV to RM 2.26 (from RM1.98), ascribing a 8.6x P/E (5Y average) on FY23 EPS of 26.6 sen as we roll over our valuation base year to FY23. We like FLB given its favourable product mix with primary exposure to the US RV market (c.50% of US sales) that commands a higher ASP. The strong USD will also benefit FLB as >95% of its sales are denominated in USD while >80% of the cost is in ringgit.
Total share buy back to date 8.36%. Once reach 10%, possibility to get share dividend of 1 bonus share for every 10. I feel the stock is undervalued due to overall market sentiment. I will keep collecting, tak kisah the price.
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