Tambun's Ambitious Move

Recently I've just found out that Tambun Indah has a new website for its Pearl City. It is quite nicely done.

In my previous post I mentioned that we might see the first condominium in Simpang Ampat soon, perhaps after 2 years time.

However, if you look at the latest Pearl City master plan below, there is an item in pink colour which is the "Avenue Garden Serviced Apartment".

       Latest Pearl City Master Plan

The initial plan for this project includes 4 layout with sizes of 775, 980, 1100 & 1260 sq ft. It should be something like Straits Garden with commercial title.

It is understood that Avenue Garden might be launched in early 2015, which is far ahead of what I expected.

How will potential buyers respond to this project? I can't be too optimistic as it does not come with a residential title, unless Tambun Indah give it an irresistible price.

Anyway, it will be located next to the GEMS International School & a proposed commercial tower which will house Tambun Indah future head quarter. The proposed medical center & under-construction Pearl City Mall will be at a short walking distance.

From now on, I think Tambun will concentrate on its 600-acre Pearl City development. Future launches in the pipeline include Rain Tree Park 2, Pearl Tropika, Pearl 28, Central Avenue shop offices as well as Avenue Garden suites.

Latitude: Any Space For Growth?

Latitude Tree FY14Q4 Financial Result

LATITUD	FY14Q4	FY14Q3	FY14Q2	FY14Q1	FY13Q4
Revenue	142.8	146.8	184.4	177.1	124.4
PBT	10.3	14.8	26.0	20.7	9.4
PBT%	7.2	10.1	14.1	11.7	7.6
PATAMI	8.7	12.8	19.0	14.6	5.9
MAS Rev	23.4	32.3	31.6	28.9	23.2
MAS PBT	-0.7	3.0	2.1	1.2	-1.0
VIET Rev	114.4	108.1	147.7	142.2	96.1
VIET PBT	13.0	10.9	24.9	20.0	12.0
THAI Rev	5.0	6.4	5.1	6.0	5.2
THAI PBT	-0.4	-0.1	-0.3	0.02	-0.5
Total Equity	308.2	296.8	270.1	249.8	232.1
Total Assets	475.3	475.5	530.1	478.6	449.8
Trade Receivables	37.0	49.1	58.2	55.4	33.8
Inventories	93.5	90.7	95.4	81.8	89.7
Cash	123.1	109.0	147.4	116.1	96.1
Total Liabilities	167.9	179.3	205.5	179.3	173.4
Trade Payables	79.1	77.7	95.7	85.1	72.9
ST Borrowings	78.8	91.4	95.5	78.9	85.1
LT Borrowings	7.9	8.9	11.1	12.3	13.5
Net Cash Flow	26.5	11.5	48.2	14.6	41.9
Operation	81.2	55.5	42.2	20.3	52.9
Investment	-37.6	-34.0	-4.1	-1.2	-3.1
Financing	-18.5	-5.8	5.0	-8.6	-7.4
EPS	8.93	13.12	19.52	15.02	6.12
NAS	3.17	3.05	2.78	2.57	2.39
Net D/E Ratio	NC	NC	NC	NC	0.01

Latitude's FY14Q4 revenue & PATAMI drop 2.7% & 32% QoQ respectively. This is mainly due to loss of 8 production days in its Vietnam factories, together with delay in goods delivery.

If there are 26 working days in a month, then 8 days will represent 10% in a quarter with 3 months.

The drop in PBT margin to 7.2% is a bit disappointing. Increasing raw materials cost might be the reason but I'm not sure whether the hiccup in Vietnam plays a part or not.

Anyway, revenue of RM142.8mil is still an acceptable figure for me.

Despite the Vietnam trouble, revenue & PBT from Vietnam operation in the latest quarter are still higher QoQ and YoY.

Balance sheet grows stronger with more cash and less borrowings compared to previous quarter, even though RM28mil was spent on acquisition of remaining shares of LTIG earlier this year. This is because it has excellent operating cash flow at RM81.2mil.

Latitud (RM mil)	FY14	FY13	FY12	FY11	FY10	FY09	FY08
Revenue	651.0	493.7	517.9	500.6	506.9	397.4	404.2
Revenue growth %	31.9	-4.7	3.5	-1.2	27.6	-1.7
PBT	71.9	35.7	16.6	21.7	40.3	11.2	8.4
PBT%	101.4	115.1	-23.5	-46.2	259.8	33.3
PAT	55.0	24.4	9.8	12.5	27.7	12.5	10.8
PAT growth %	125.4	149	-21.6	-54.9	121.6	15.7
EPS	56.59	25.07	10.1	12.8	28.5	21.6#	16.7#
NAS	3.17	2.39	2.16	2.02	1.97	2.74#	2.47#
ROE	17.8	10.5

For the whole FY14, revenue improves by 31.9% to RM651mil while PATAMI jumps 125.4% to RM55mil. This includes a forex (USD vs MYR) gain of 5.2%. ROE reaches an impressive 17.8%.

EPS stands at 56.6sen which means Latitude is currently traded at a PE ratio of 6.0x at share price of RM3.40.

If given a fair PE of 8x, my target price for latitude will be RM4.53.

Latitude will only pay dividend once a year in December. It paid 6.3sen for FY13 which represents 25% payout from its net profit.

If it were to keep this dividend payout ratio, this means that it might pay 14sen for FY14. This is a 4.1% yield at current share price of RM3.40.

What if it decides to pay 40%, since its cash are piling up? This may mean 6.8% yield with 23sen dividend.

Besides, it is also capable to "reward" shareholders with 1:2 bonus issues.

Does Latitude still has space to grow its top & bottom lines?

LTIG became Latitude's wholly owned subsidiary in Q3 of FY14, so it contributes only half of FY14's result. FY15 will see full contribution from Vietnam's operation.

FY14 also sees Latitude increases its Vietnam production capacity by USD1.0mil per month or roughly RM37mil a year. However, I'm not sure what is the utilization rate. If the utilization rate is already high, then the growth might be limited and it needs more capex for expansion.

The most important thing is the demand for its products. As almost all its export are to the US, it will be closely linked to US economy and consumer spending.

It is learnt that Vietnam government will compensate those factories affected by riot. This might also contribute a little to Latitude's bottom line if it is true.

Anyway, Latitude is still trading around PE of 6 and price/book ratio of 1.1x. 

Latitude's historical financial results are up and down, which might be the reason market refuses to give it a higher PE. Will this trend continue in the near future?

YOCB: A Dilemma...

YOCB FY14Q4 Financial Result

YOCB (RM mil)	FY14Q4	FY14Q3	FY14Q2	FY14Q1	FY13Q4
Revenue	53.5	47.2	50.7	46.5	40.6
PBT	2.4	7.8	9.8	7.1	5.2
PBT%	4.5	16.5	19.3	15.3	12.8
PAT	2.0	5.9	6.9	5.2	3.9
Total Equity	153.0	154.2	148.3	144.6	139.3
Total Assets	196.2	195.6	195.6	178.9	177.9
Trade Receivables	52.1	49.7	56.5	41.1	40.0
Inventories	65.8	69.2	68.6	62.3	57.2
Cash	35.0	32.6	31.8	36.4	41.4
Total Liabilities	43.2	41.4	47.3	34.3	38.6
Trade Payables	14.6	8.2	14.0	8.0	11.6
ST Borrowings	25.9	29.0	29.0	23.2	24.1
LT Borrowings	0.0	0.0	0.0	0.0	0.0
Net Cash Flow	-6.4	-8.7	-9.6	-5.0	11.5
Operation	4.7	-0.8	-10.9	-0.7	12.6
Investment	-6.4	-6.4	-0.3	-0.2	-2.0
Financing	-4.6	-1.6	1.7	-4.1	0.9
EPS	1.24	3.68	4.34	3.27	2.44
NAS	0.96	0.96	0.93	0.90	0.87
Net D/E Ratio	Net Cash	Net Cash	Net Cash	Net Cash	Net Cash

For YOCB's latest FY14Q4 results, there are 2 surprises, one positive & one negative.

The negative surprise is PBT crashed 69% & 54% both QoQ & YoY respectively to just RM2.4mil. This almost certainly means the share price might crash too.

The positive surprise is quarterly revenue reaches all-time high at RM53.5mil, despite the fact that Q4 is its weakest quarter traditionally.

If the profit falls like this because of less sales made, then it is a yellow flag and most probably I will sell.

If the profit falls but sales does not fall but instead rise to a record high, then it is a dilemma...

From YOCB super simple financial report, it just mentions that the lower profit in current quarter is due to higher operating cost, accruals & provision made for certain expenses. There is no breakdown of those expenses.

In this case I would like to know the gross margin but it is not available. Could it be due to some one-off expenses?

On the other hand, higher revenue is due to higher consignment, boutique and export sales, as well as fair & pre-Hari Raya sales.

This year Hari Raya falls on 28th & 29th July, which is only 10 days earlier than last year's 8th & 9th August. Nevertheless, FY13Q4 & FY14Q1 were its two weakest quarters in term of both revenue and profit.

YOCB Segmental Results (FY14 vs FY13)

YOCB (RM mil)	FY14 Rev	FY13 Rev	FY14 PBT	FY13 PBT
Investment	0	0	6.4	4.8
Design & Manufacturing	33.2	29.0	4.9	5.7
Retailing	31.0	26.9	4.3	2.6
Distribution & Trading	133.8	122.7	17.0	18.2

From the analysis of segmental reporting, all 3 main business segments register increasing revenue for FY14. However, PBT of design & manufacturing and distribution & trading segments fall compared to FY13, especially in FY14Q4.

Net cash flow enters negative territory this year, mainly due to investment for future expansion, as well as increasing inventories & receivables. The increasing working capital part does raise a bit of concern earlier but I think it is still manageable at the moment.

Cash & equivalent increases RM2.4mil to RM35mil while borrowing drops RM3.1mil to RM25.9mil.

Overall in FY14, revenue grows 11% but PATAMI falls 1%. ROE falls slightly to 13.1%.

YOCB Historical Financial Results

YOCB (RM mil)	FY14	FY13	FY12	FY11	FY10
Revenue	197.9	178.1	153.9	141.0	127.5
Revenue growth %	11.1	15.7	9.1	10.6
PBT	27.2	27.4	23.5	25.2	21.1
PBT%	-0.7	16.6	-6.7	19.4
PAT	20.0	20.2	17.3	18.3	15.1
PAT growth %	-1.0	16.8	-5.0	21.2
EPS	12.53	12.65	10.8	15.24	15.5
ROE	13.1	14.5

It is great to note that YOCB's revenue is in an uninterrupted increasing trend since listed in FY2010. However, net profit did take a slight dip in FY12 & latest, in FY14. 

EPS for FY14 is 12.5sen, so my own target price will be revised downward to RM1.25.

YOCB has declared a second interim single tier dividend of 2sen, which makes it total 4sen for FY14 which is similar to previous year.

This represents a 32% payout ratio and 3.4% dividend yield at share price of RM1.18.

On the prospect of FY15, the management expects a satisfactory growth in its financial performance, and they always mention this in their financial report.

I'm still undecided whether to keep or sell YOCB. Since it only makes up a small percentage of my portfolio, it is unwise to sell partially. Perhaps I need to wait for another 3 months for next quarter's result. 

Anyway, how will other investors react towards YOCB's latest result?

Inari: Ends FY14 With A WOW

Inari FY14Q4 Financial Results

INARI	FY14Q4	FY14Q3	FY14Q2	FY14Q1	FY13Q4
Revenue	223.9	191.8	186.6	191.3	67.6
PBT	31.4	27.2	26.6	22.1	13.5
PBT%	14.0	14.2	14.3	11.6	20.0
PAT	30.8	25.0	24.4	21.0	13.1
Total Equity	260.2	231.1	202.2	176.8	153.4
Total Assets	487.5	461.4	438.8	406.2	366.4
Trade Receivables	137.3	131.8	123.5	121.1	93.0
Inventories	37.8	137.7	126.2	107.4	105.5
Cash	65.3	53.2	60.0	48.9	44.6
Total Liabilities	226.9	231.1	236.9	230.0	213.8
Trade Payables	120.0	118.4	131.2	138.7	120.2
ST Borrowings	36.4	33.0	26.2	19.6	20.4
LT Borrowings	18.6	15.8	16.4	17.8	10.3
Net Cash Flow	20.9	8.8	15.3	4.3	3.8
Operation	41.2	12.4	11.5	7.2	86.3
Investment	-43.4	-30.4	-14.5	-9.6	-112.2
Financing	23.0	26.9	18.4	6.8	29.7
EPS	6.23	5.19	5.31	4.70	3.69
NTA	0.46				0.35
Net D/E Ratio	Net cash	Net cash	Net cash	Net cash	Net cash

As expected, Inari has just released its best ever quarterly result in which revenue & PAT improve 16.7% & 23.2% respectively QoQ.

It is mentioned that if not because of ESOS charge, PBT of FY14Q4 & FY14Q3 will be RM2.0mil & RM2.1mil more.

Overall it is a great ending to its FY14. Looking ahead of FY15, the management "looks forward to improving on its current level of performance in the EMS industry".

Because of the consolidation of Amertron, FY14's revenue surges 229% to RM793.7 compared to FY13. At the same time, PATAMI also grows impressively at 141% to RM101.3mil, slightly above my prediction of RM95mil.

It still keeps its net cash position despite aggressive CAPEX, thanks to good cash flow from operation. FY14's ROE stands at a remarkable 38.9%.

INARI (RM mil)	FY14	FY13	FY12	FY11
Revenue	793.7	241.1	180.8	119.6
Revenue growth %	229.2	33.3	51.2
PBT	107.2	43.3	20.3	20.5
PBT%	13.5	17.9	11.2	17.1
PAT	101.3	42.0	19.3	18.8
PAT growth %	141.2	117.6	2.7
EPS	21.42	12.32	6.06	11.21
ROE	38.9	27.4	23.3	41.4

Inari has declared a fourth & final interim single tier dividend of 1.8sen for FY14. There is no special dividend this time so this quarterly dividend is actually lower QoQ (2.0sen) & YoY (1.9sen).

Overall 6.8sen for FY14 represents about 40% payout, with a yield of 2.1% at share price of RM3.23.

It has recently purchased a 5.05-acre leasehold land in Batu Kawan and a 2-storey 166k sq ft factory on a 5.5-acre leasehold land in Bayan Lepas for business expansion. So it should not give out too much as dividend.

(sen)	FY14	FY13	FY12
1st	1.1 (0.4)	0.8	0.6
2nd	1.1 (0.4)	0.9	0.6
3rd	1.2 (0.8)	0.9	0.8
4th	1.8	1.0 (0.9)	0.8

At RM101.3mil, Inari's EPS for FY14 is 17.8sen with a PE ratio of 18.1x.

As it is still in an expansion mode, I think it can achieve better performance in FY15, perhaps RM120mil net profit. 

Base on current total shares of 570mil, projected FY15 EPS will be 21.1sen, with target price of RM3.16 base on PE ratio of 15x.

Even though current share price is above my target price, I will not sell Inari at this moment as it has great potential for growth. I feel that the excitement does not stop here.

Matrix: Hope For Better Second Half

Matrix FY14Q2 Financial Result

MATRIX	FY14Q2	FY14Q1	FY13Q4	FY13Q3	FY13Q2
Revenue	163.7	134.7	144.3	127.4	147.3
PBT	58.6	54.0	56.4	48.7	40.6
PBT%	35.8	40.1	39.1	38.2	27.6
PATAMI	42.4	38.6	40.7	36.2	30.0
Res & Com Prop %			74.1	66.7	76.0
Industrial Prop %			20.8	27.8	21.0
Industrial Land %			5.1	5.5	3.0
Total Equity	613.5	582.0	552.4	540.1	518.3
Total Assets	944.5	964.5	900.5	862.8	793.0
Trade Receivables	160.0	144.3	140.8	161.5	118.1
Prop dev cost	524.4	523.5	443.8	362.4	400.0
Inventories	0.7	0.7	1.6	1.4	2.6
Cash -OD	29.4	96.0	83.8	211.2	206.5
Total Liabilities	331.1	382.5	348.1	322.7	274.7
Trade Payables	253.7	299.3	245.7	229.5	198.3
ST Borrowings	32.2	34.4	35.5	36.7	8.8
LT Borrowings	1.5	13.2	15.3	15.5	16.1
Net Cash Flow	-39.4	27.2	53.4	180.8	176.1
Operation	68.8	85.6	39.7	120.7	65.2
Investment	-55.7	-29.4	-69.2	-37.7	-17.0
Financing	-52.5	-29.0	82.9	97.8	127.9
EPS	14.00	12.80	13.50	12.10	13.10
NAS	2.02	1.92	1.83	1.80	1.73
D/E Ratio	0.01	Net cash	Net cash	Net Cash	Net cash

Matrix has achieved its best ever quarterly result since listed in May 2013. Compared QoQ, revenue up 21.5% and PATAMI improves 9.8%. 

Overall first half's PATAMI at RM81mil is 6.6% better than previous year's corresponding period even though revenue takes a slight dip due to less land sales.

Total sales in 1HFY14 are only RM291mil with RM18.9mil of it comes from industrial land sales. Matrix has launched RM409mil worth of projects in the first half, with a higher new target launch of RM819mil in FY14. It will launch another RM410mil new projects in 2HFY14.

If we compare to overall sales of RM788mil in FY13, current sales level is quite discouraging. However, it is expected to pick up in 2HFY14 due to more land sales and decent response to its recent launch in Bandar Sri Sendayan.

Unbilled sales of RM434.7mil at mid-FY14 is slightly lower than RM440.8mil 3 months ago.

For its balance sheet, free cash level (minus bank overdraft) falls substantially to only RM29.4mil, mainly due to land purchase & repayment of loan, apart from the hefty dividend paid to shareholders. Anyway, cash flow from operation remains healthy.

       Sendayan Green Park

Matrix declares a second interim single tier dividend of 3.75sen, making it 8.75sen for FY14 so far. 

This 3.75sen per share looks lower compared to 5sen first interim dividend for FY14 and 5.25sen (after tax) in the same period last year. If adjusted to recent 1:2 bonus issue, this 3.75sen will be equivalent to 5.625 sen before bonus issue.

I would expect a total 17.5sen dividend for FY14, base on 50% payout ratio from guesstimated FY14 PATAMI of RM160mil. 

The first 2 interim dividends are at 7.08sen (1st dividend adjusted to 3.33sen), which means there is still 10.4sen to go. This makes its dividend yield at 5.5% at current share price of RM3.20.

If it pays out only 40% which is its minimum payout, then overall dividend will be 14sen and it is still about 7sen to go. Dividend yield is still at a good 4.4%.

At this guesstimated earning level, projected EPS for FY14 will be 35sen. So my target price for Matrix is RM3.50 base on PE ratio of 10x.