Latitude: Still Looking Good

Latitude Tree FY15Q1 Financial Result

LATITUD	FY15Q1	FY14Q4	FY14Q3	FY14Q2	FY14Q1
Revenue	175.7	142.8	146.8	184.4	177.1
Gross Profit	26.2	20.3	23.8	35.8	29.9
PBT	18.5	10.3	14.8	26.0	20.7
PBT%	10.5	7.2	10.1	14.1	11.7
PATAMI	16.6	8.7	12.8	19.0	14.6
MAS Rev	27.7	23.4	32.3	31.6	28.9
MAS PBT	2.3	-0.7	3.0	2.1	1.2
VIET Rev	141.0	114.4	108.1	147.7	142.2
VIET PBT	14.8	13.0	10.9	24.9	20.0
THAI Rev	5.8	5.0	6.4	5.1	6.0
THAI PBT	1.0	-0.4	-0.1	-0.3	0.02
Total Equity	327.2	308.2	296.8	270.1	249.8
Total Assets	502.8	475.3	475.5	530.1	478.6
Trade Receivables	59.9	37.0	49.1	58.2	55.4
Inventories	97.4	93.5	90.7	95.4	81.8
Cash	124.0	123.1	109.0	147.4	116.1
Total Liabilities	173.1	167.9	179.3	205.5	179.3
Trade Payables	91.7	79.1	77.7	95.7	85.1
ST Borrowings	74.8	78.8	91.4	95.5	78.9
LT Borrowings	6.4	7.9	8.9	11.1	12.3
Net Cash Flow	-1.6	26.5	11.5	48.2	14.6
Operation	6.1	81.2	55.5	42.2	20.3
Investment	-2.7	-37.6	-34.0	-4.1	-1.2
Financing	-6.1	-18.5	-5.8	5.0	-8.6
EPS	17.13	8.93	13.12	19.52	15.02
NAS	3.37	3.17	3.05	2.78	2.57
Net D/E Ratio	NC	NC	NC	NC	NC

Despite slight drop in revenue and PBT YoY, Latitude's FY15Q1's PATAMI improves 14% YoY from RM14.6mil to RM16.6mil due to acquisition of remaining shares in its Vietnam operation.

If compared to preceding quarter of FY14Q4, current quarter's result is much better due to higher orders for better margin products, strengthening of USD against RM, and lost of 8 days production in preceding quarter due to Vietnam riot.

Cash flow in first quarter of FY15 is not so "nice" due to substantial increased in trade receivables. However, this does not seem to be a problem from historical point of view.

Balance sheet remain strong with cash inches up while total borrowings are reduced.

As US economy is in the process of recovery, I think this will only benefit Latitude in the near term.

Latitude's 8.5sen dividend for FY14 disappoints most investors I guess, as the payout ratio is just 15% compared to previous year's 25%.

Hopefully the management will make good use of its cash to expand its business.

Since early Oct14, Malaysia's famous investor Mr Koon YY has been collecting Latitude's shares. He currently owns 6.21% of Latitude.

Another famous investor Fong SL has reduced its stake in Latitude from 1365k to 530k. He might have bought the shares at below RM1 in early 2013 and has earned 300% in one year from Latitude.

For me, I will not sell at this stage. 

I will keep my previous target price of RM4.53 base on FY14 actual EPS and PE of 8x.

At share price of RM3.70, Latitude's actual PE ratio is just 6.5x, compared to Homeritz's PE ratio of 8.2x at 83sen per share.