Monday 10 February 2014

Latitude: Ready For New Altitude

Too bad I didn't check out Bursa's announcement during the weekend.

This morning I notice that Latitude Tree's share price makes a big leap. Then I see an announcement made by Latitude last Friday.

It was about the financial result of Brooke Asia Ltd, formerly known as Latitude Tree International Group Ltd (LTIG) listed in Singapore Exchange.

From the half-year (July 2013 - Dec 2013) financial report, LTIG registers SGD118.0mil revenue and SGD18.0mil PAT. Its profit attributable to owners of company stands at SGD17.6mil.

If the exchange rate is SGD1 : RM2.55, then LTIG 6 months net profit will be RM44.9mil.

Before the acquisition was completed on 23 Jan 2014, Latitude Tree hold 77.6% of LTIG. So this will translate to RM34.8mil net profit to Latitude Tree for the first 6 months of FY2014 (Jul-Dec 2013).

AS we know, Latitude Tree has RM14.6mil net profit in its FY14Q1, in which almost 100% (97% of PBT) comes from LTIG. So, should it be approximately RM20.2mil net profit for Latitude Tree in FY14Q2?

Actually I'm not sure whether my interpretation of LTIG financial report is correct or not. I'm not sure whether there is any special gain arising from the process of shares sales by LTIG, or the profit is purely from its furniture manufacturing operation.

If my assumption is true, then Latitude Tree might be one of the most undervalued stock in 2014.

If LTIG duplicates its 1H14 performance and operation in Malaysia is neither profit nor loss making, then it will be net profit of SGD17.6mil or RM45mil in the second half of FY14 for Latitude.

As LTIG will be wholly owned by Latitude from 23 Jan 2014, almost all of the RM45mil will go into Latitude's account.

This will bring the total net profit for Latitude to about RM80mil for its FY14 that ends in Jun14, or EPS 82sen. This represents a forward PE ratio of just 2.9x at current share price of  RM2.42!

In other words, target price of Latitude Tree should be RM8.20 if fair PE is 10x.

All these seem too good to be true, and there are a lot of "Ifs".

For confirmation, one may wait for the official FY14Q2 result of Latitude which will be released later this month.


  1. Thanks for sharing. Today Latitude make a big jump~! :)

  2. Ur welcomed Wayne.
    But I haven't accumulate enough!

  3. Another 3% today, will you continue to chase since the TP is 8.20?

  4. RM8.20 is not my target price, it's just an "optimistic" price. My target price still the same as stated in my portfolio page - RM4.12.

    Initially I plan to top up after Q2 result, but I did buy some recently after LTIG result was announced. Now waiting for price correction to buy more, or after official Q2 result.

    Have to be cautiously optimistic :)