Monday 30 November 2015

Latitud: Best Ever Quarterly Result As Expected

Latitude Tree FY16Q1 Financial Result

LATITUD (RM mil) FY16Q1 FY15Q4 FY15Q3 FY15Q2 FY15Q1
Revenue 218.0 179.6 165.6 189.1 175.7
Gross Profit 35.6 29.4 27.5 34.4 26.2
Gross% 16.3 16.4 16.6 18.2 14.9
PBT 31.3 21.2 21.3 29.5 18.5
PBT% 14.4 11.8 12.9 15.6 10.5
PATAMI 28.1 16.2 19.5 27.4 16.6






MAS Rev 34.0 26.4 31.2 32.1 27.7
MAS PBT 10.7 1.5 5.4 5.4 2.3
VIET Rev 176.4 145.9 125.8 149.4 141.0
VIET PBT 18.9 18.4 14.4 22.6 14.8
THAI Rev 5.5 4.9 9.0 5.6 5.8
THAI PBT 0.8 0.2 1.1 0.7 1.0






Total Equity 479.4 410.7 390.1 366.6 327.2
Total Assets 729.9 594.3 575.6 548.6 502.8
Trade Receivables 79.8 49.3 63.3 63.4 59.9
Inventories 128.9 118.7 109.7 103.9 97.4
Cash 214.5 165.8 142.1 151.3 124.0






Total Liabilities 249.1 182.4 184.3 181.0 173.1
Trade Payables 110.5 88.1 75.0 89.9 91.7
ST Borrowings 105.3 76.9 90.4 82.6 74.8
LT Borrowings 26.2 12.4 17.1 6.1 6.4






Net Cash Flow 33.9 19.0 -1.0 15.9 -1.6
Operation 7.9 65.4 22.8 22.2 6.1
Depreciation 3.8 18.6 14.0 9.0 4.4
Investment -11.1 -37.8 -34.8 -7.5 -2.7
PPE purchase 4.0 31.6 28.7 2.5 1.1
Financing 24.1 -14.5 3.6 -2.2 -6.1
FCF 3.9 33.8 -5.9 19.7 5.0






Dividend paid 0.0 8.3 8.3 0.0 0.0






EPS 28.95 16.66 20.07 28.19 17.13
NAS 4.93 4.22 4.01 3.77 3.37
Net D/E Ratio NC NC NC NC NC


Latitude just posted its record-breaking quarterly result in term of revenue, PBT and EPS.

Compared to immediate preceding quarter of FY15Q4, revenue in FY16Q1 increased by 21.3% to RM218mil thanks to stronger USD against MYR by 17%. The rest of the improvement was contributed by higher orders and higher production output.

PBT increased by 47.6% or RM10.1mil QoQ and there was a forex gain of RM7.8mil in this quarter.

Geographical breakdown showed a significant jump in Malaysia's revenue and PBT margin.

Balance sheet and cash flow remain good as usual.

Earlier, Latitude has proposed a 12sen dividend for its FY15.

Though it is 40% higher compared to FY14's dividend of 8.5sen, it just represents 15% of dividend payout for FY15.

Does the management wish to keep more cash for imminent expansion, or just reluctant to share its profit with shareholders?

I can't say that its directors are stingy when they are getting salaries like this:

       ARFY15


Normally one executive director in a small listed company can easily get paid RM1mil a year, but those 2 executive plus 4 non-executive directors of Latitude only get RM415,000 a year in total, not even enough to buy a double storey terrace house...

Regarding future expansion, Latitude plans to expand its upstream operation especially Kiln Dry and Saw Mill facilities to meet its raw materials requirement.


       Saw Mill


The newly acquired panel board lamination factory will provide new varieties of raw materials and allows Latitude to diversify into new industry & new products.

This new factory located in Klang was acquired in Jan15 for RM22mil and started commercial operation in May15.

Besides, Latitude has allocated RM35mil to upgrade or automate its existing production lines to improve production efficiency.

Latitude exports 99% of its furniture and 92% goes to US. It plans to explore other markets with high growth potential such as Australia, China, Russia, India and Indonesia.

However, it just dissolved its subsidiary in Indonesia in Oct14.

Today Latitude's share price closed at RM7.43, which is at an actual PE of 9.1x base on FY15 EPS of 82sen.

Will it produce a better financial result and give higher dividend in FY16?

There might be a chance. We can only wait and see.

Thursday 26 November 2015

Johotin: Too Much Expectation

Johore Tin FY15Q3 Financial Result

JOHOTIN (RM mil) FY15Q3 FY15Q2 FY15Q1 FY14Q4 FY14Q3
Revenue 97.9 113.6 90.8 104.7 90.7
Gross Profit 12.1 18.4 14.6 16.0 11.7
Gross % 12.4 16.2 16.1 15.3 12.9
PBT 4.4 9.2 6.1 6.6 4.0
PBT% 4.5 8.1 6.7 6.3 4.4
PATAMI 3.3 6.7 4.0 5.2 2.9






Tin Rev 20.4 20.8 20.9 24.7 21.1
Tin PBT 0.5 2.7 1.3 4.4 1.3
F&B Rev 77.3 93.1 69.9 79.9 69.6
F&B PBT 4.4 7.3 5.2 3.0 3.0






Total Equity 191.5 191.4 184.7 179.9 175.5
Total Assets 307.2 320.2 328.8 323.6 252.8
Trade Receivables 62.3 75.6 42.0 70.5 39.4
Inventories 94.6 112.6 148.2 125.0 81.8
Cash 33.9 21.8 28.9 25.5 31.1






Total Liabilities 116.2 128.9 144.1 143.6 77.2
Trade Payables 21.0 26.9 14.8 54.5 16.1
ST Borrowings 63.7 69.7 95.0 58.8 35.6
LT Borrowings 7.0 8.1 9.4 10.5 11.7






Net Cash Flow 8.3 -3.7 3.4 -12.7 -7.1
Operating CF 18.3 -6.6 -26.7 -28.7 -9.0
Depreciation 5.1 3.8 1.9 7.1 5.3
Investment CF -8.4 -6.5 -6.5 -12.3 -6.7
Purchase PPE 8.6 6.6 6.5 12.7 7.1
Financing CF -1.6 9.4 36.5 28.3 8.7
FCF 9.7 -13.2 -33.2 -41.4 -16.1






Dividend paid 3.3 0.0 0.0 1.9 1.9






EPS 3.52 7.16 4.27 5.59 3.15
NAS 2.05 2.05 1.98 1.94 1.88
D/E Ratio 0.19 0.29 0.41 0.24 0.09


Johotin's share price dropped 20% from RM2.80 to RM2.24 in a single day after the announcement of its latest FY15Q3 result.

It's like it has suffered loss or is facing quality issue again.

Without a doubt, Johotin's latest quarterly result is a disappointing one.

Its revenue drops 13.8% while PATAMI drops 50.7% compared to record-breaking immediate preceding quarter.

Stronger USD against MYR is not good for Johotin, as it suffered net forex loss in the past few quarters. So it is expected that there is no escape from losing on forex this time.

I think most investors are anticipating a phenomenal result from Johotin due to recent low raw material price, and excellent performance by its peers.

Nevertheless, Johotin's gross margin actually drops compared both QoQ and YoY, resulting in a poorer result.

I think the main issue for this financial result is lower revenue from F&B and increased cost for tin manufacturing.

There is a RM0.8mil realized forex loss and RM0.5mil derivative gain in this quarter.

On the positive side, cash flow improves with positive free cash flow, while increased cash lowers debt/equity ratio further to 0.19.




Since early Oct15, Johotin's share price rallied non-stop from RM1.50 to RM2.80 before it dived. 

Though it has already exceeded my target price, I did not sell because I thought that it might post a good result.

Furthermore, the price of RM2.80 is actually not too "overpriced" if we expect Johotin to perform better in the future. 

If EPS of FY15Q3 just stays flat with FY15Q2 at 7.16sen, the share price of RM2.80 seems to be quite fair.

Anyway, the truth is that Johotin can't sustain its earning in this quarter.

Can it rebound in the next quarter?

I really don't know. It can get better or get worse.

Johotin's new milk packaging factory seems not ready yet at this time, and the completion might be delayed to FY16.

Once the new factory is in operation, surely revenue will pick up and hopefully its profit will follow.

So I think the chance of it to get better is higher.


Monday 23 November 2015

Tambun: Affected By APDL Delay

Tambun Indah FY15Q3 Financial Result

TAMBUN (RM mil) FY15Q3 FY15Q2 FY15Q1 FY14Q4 FY14Q3
Revenue 86.2 60.0 130.4 110.1 116.8
Gross Profit 38.0 28.0 47.6 38.8 43.8
Gross% 44.1 46.7 36.5 35.2 37.5
PBT 32.9 22.2 41.3 35.1 34.8
PBT% 38.2 37.0 31.7 31.9 29.8
PATAMI 23.8 17.1 29.9 25.9 25.5






Property Rev 85.4 59.6 129.5

Property OP 31.6 21.6 40.6

Investment Rev 0.5 0.2 0.2

Investment OP 0.9 2.6 2.4







Total Equity 428.8 417.1 427.5 397.0 377.9
Total Assets 704.9 733.7 667.5 661.8 636.8
Trade Receivables 117.9 125.0 146.0 118.0 117.0
Prop dev cost 94.5 67.6 59.5 72.5 83.9
Inventories 2.2 2.2 2.2 2.4 0.3
Cash 118.4 143.4 116.0 131.5 151.1






Total Liabilities 273.3 314.0 237.1 262.4 256.6
Trade Payables 82.5 104.2 95.9 103.9 93.1
ST Borrowings 31.4 39.2 30.9 35.2 13.8
LT Borrowings 153.2 165.0 119.1 117.7 133.2






Net Cash Flow -13.0 12.0 -12.3 17.7 37.3
Operation 27.6 3.6 28.8 -5.5 3.0
Investment -28.9 -28.3 -11.6 -12.8 8.5
Financing -11.7 36.7 -29.6 36.0 25.8






Dividend paid 41.0 12.6 12.6 26.8 26.8






EPS 5.61 4.05 7.10 6.24 6.22
NAS 1.01 0.99 1.01 0.94 0.92
D/E Ratio 0.15 0.15 0.08 0.05 Net cash


Even though Tambun's FY15Q3 result has improved compared to preceding quarter of FY15Q2, its revenue and PATAMI actually drop 26% and 6.7% compared YoY.

In FY15Q3, it only registered RM21.8mil new sales, compared to RM25.1mil in Q2 & RM146.3mil in Q1.

Up to 9M15, it only achieved RM193mil new sales, which is less than half of its target of RM400mil in FY15.

To recap, Tambun manage to achieve RM429mil and RM500mil new sales in FY14 & FY13 respectively. 

Latest unbilled sales drop further to RM343.2mil from RM408.1mil a quarter ago.

Is Tambun's sales really that bad?

I think those who have visited its sales office or recently bought its properties might not think so.

It is not a secret that many property developers in Penang are facing a delay in getting Advertising Permit & Developers License (APDL) from the federal government.

The approval process which normally takes 2 weeks is now delayed to many many months with no clear reasons (though many should roughly know the reason).

Up until end of Q3 (Sep15), I think Tambun still could not get the APDL for its upcoming projects such as Avenue Garden (GDV RM92.8mil), Raintree Park 2 (GDV RM217.7mil) & Pearl Tropika (GDV RM138.4mil).

That's why it can only recognized RM21.8mil new sales from its existing projects.

I understand that Tambun has already obtained the APDL now and we should see vast improvement in its new sales in FY16, if not in FY15Q4, depends on when the S&P agreement are signed.

Judging from the interest or "registration" for its upcoming projects, Tambun should be able to meet its target RM400mil new sales in FY15 if no delay in APDL.

There is a high demand for properties in Pearl City in which its latest officially launched project Raintree Park 1 which consists of 310 units properties are almost 100% sold out.

The average take up rate for its on-going projects is an encouraging 91%.




Because of this delay in new project launch, Tambun might not be able to produce "consistent" quarterly results in the near future.

Its upcoming quarterly results might be "patchy".

Tambun has started to collect rental from GEMS International School in Pearl City, which is estimated to be RM3.5mil a year according to analyst.

Pearl City Mall which is scheduled to be operational in the first half of 2016 will also contribute to Tambun's rental income later.

Unlike GEMS, Tambun is indirectly involved in the operation of the mall via a 50/50 joint venture.

Besides, there might be another future rental/operation income in medical center in Pearl City.

Tambun's borrowings have increased due to the addition of investment property to the group.

Asiapac registered a massive fair value gain in investment properties after its Imago Mall was completed. Will Tambun do the same for its Pearl City Mall?

Anyway, Tambun has revised its dividend policy to exclude the valuation gain/loss from its investment properties.

A first interim dividend of 3 sen for FY15 has been announced, which is similar to last year.

I'm confident that Tambun should be able to pay at least 9sen dividend for FY15, which means a yield of 6.4% at share price of RM1.40.

Its FY15 EPS should be able to exceed 20sen and this will give it a relatively low PE ratio.

I think all these should provide a good support for its share price.

If the sales recognition of the delayed projects are all recognized in 2016, then I guess year 2016 should be an impressive year for Tambun, as long as there is no more delay in APDL approval.




Tambun is the "pioneer" and also "longest serving" stock in my portfolio started since mid-2013. It is also the one and only stock which has ever occupied my core portfolio.

Of course I have pared down my shareholding in Tambun gradually since 2014.

As I wish to limit my portfolio to maximum 15 stocks, I did think of selling all Tambun shares to free up some space, because share price of property stocks are not expected to do very well in the next one or two years.

Once, I thought of this seriously on bed before I slept and decided to sell all Tambun's shares the next morning. However, in the next morning, I changed my mind and decided not to sell.

I'm not asking readers to buy or not to sell shares of Tambun. My position is different as my remaining Tambun shares are already "free shares" and I plan to stay with it for a special reason.