I wonder why Johotin. I know that he is a good investor so I checked Johotin again.
Net profit was not that good though, may be due to compensation paid for the quality issue.
- Able Dairies (acquired 100% in Aug11): condensed & evaporated milk
- Able Food (acquired 80% in Feb13): milk powder
From the article above, the CEO expects 25% revenue growth in Able Dairies in FY15, while Able Food's revenue will grow to about USD4-5mil per month (RM13-16mil per month) or RM40-48mil per quarter (according to article above, using old exchange rate) after its new factory is ready in FY15Q2 and fully functional.
Or is the revenue of US$4 million to US$5 million per month above meant for the whole F&B segment and not only the new milk powder business?
I think it is unlikely to be the whole F&B segment as for 12 months of FY14, overall revenue from F&B segment is already RM236mil or average RM56mil per quarter, even before the new factory is ready.
However, if the USD4 to USD5mil per month figures are expected just from the new factory (milk powder), it is too good to be true as it will almost double its already-high current F&B segment revenue.
I think there is still risk when investing in Johotin. The management tend to give profit "forecast" which it can't accomplish. So one has to be careful with its revenue or profit guidance.
In the article above, CEO mentioned that the company "is still looking at an overall net profit of RM19-21mil for its FY14" while its half year net profit was just RM4.8mil. Now FY14 net profit turns out to be only RM13mil.
The company's profit target in FY13 was also not met due to New Zealand drought which raised the selling price of milk products and lowered demand.
Personally I see Johotin as an "at-least-RM20mil-net profit-a-year company". So its EPS will be at least 21.4sen with 93.3mil shares.
However, commencement of new production facility may incur higher cost initially and erode its profit.
Johotin still has 23.3mil warrants which will expire in Nov 2017. Its exercise price is at a high of RM2.28 so I don't think EPS dilution is a problem before the mother appreciate 50% from RM1.50.
Anyway, with the release of its latest result of FY14Q4, everything does not look straight forward. It looks promising but it might not be a sure win situation.
Invest at your own risk!