Latitude: Still A Remarkable FY2015

Latitude Tree FY15Q4 Financial Result

LATITUD	FY15Q4	FY15Q3	FY15Q2	FY15Q1	FY14Q4
Revenue	179.6	165.6	189.1	175.7	142.8
Gross Profit	29.4	27.5	34.4	26.2	20.3
Gross%	16.4	16.6	18.2	14.9	14.2
PBT	21.2	21.3	29.5	18.5	10.3
PBT%	11.8	12.9	15.6	10.5	7.2
PATAMI	16.2	19.5	27.4	16.6	8.7
MAS Rev	26.4	31.2	32.1	27.7	23.4
MAS PBT	1.5	5.4	5.4	2.3	-0.7
VIET Rev	145.9	125.8	149.4	141.0	114.4
VIET PBT	18.4	14.4	22.6	14.8	13.0
THAI Rev	4.9	9.0	5.6	5.8	5.0
THAI PBT	0.2	1.1	0.7	1.0	-0.4
Total Equity	410.7	390.1	366.6	327.2	308.2
Total Assets	594.3	575.6	548.6	502.8	475.3
Trade Receivables	49.3	63.3	63.4	59.9	37.0
Inventories	118.7	109.7	103.9	97.4	93.5
Cash	165.8	142.1	151.3	124.0	123.1
Total Liabilities	182.4	184.3	181.0	173.1	167.9
Trade Payables	88.1	75.0	89.9	91.7	79.1
ST Borrowings	76.9	90.4	82.6	74.8	78.8
LT Borrowings	12.4	17.1	6.1	6.4	7.9
Net Cash Flow	19.0	-1.0	15.9	-1.6	26.5
Operation	65.4	22.8	22.2	6.1	81.2
Depreciation	18.6	14.0	9.0	4.4	17.6
Investment	-37.8	-34.8	-7.5	-2.7	-37.6
PPE purchase	31.6	28.7	2.5	1.1	10.0
Financing	-14.5	3.6	-2.2	-6.1	-18.5
FCF	33.8	-5.9	19.7	5.0	71.2
EPS	16.66	20.07	28.19	17.13	8.93
NAS	4.22	4.01	3.77	3.37	3.17
Net D/E Ratio	NC	NC	NC	NC	NC

Latitude's latest FY15Q4 result is not as good as I would have expected but it's still a good result.

Its revenue improves 8.5% QoQ to RM179.6mil but PATAMI drops 16.9% to RM16.2mil in the same period. However, PBT for both periods are almost the same.

This lower net profit is mainly due to higher tax in current period, in which there is an RM2.375mil deferred tax expense.

Better sales in current quarter is due to higher orders, higher production output & strengthening of USD vs MYR, while marginally lower PBT QoQ is due to lower unrealized forex gain compared to previous quarter.

Latitude (RM mil)	FY15	FY14	FY13	FY12	FY11
Revenue	710.0	651.0	493.7	517.9	500.6
Revenue growth %	9.1	31.9	-4.7	3.5	-1.2
Gross Profit	117.5	109.8	71.2	53.5	57.6
Gross%	16.5	16.9	14.4	10.3	11.5
PBT	90.4	71.9	35.7	16.6	21.7
PBT%	12.7	11.0	7.2	3.2	4.3
PATAMI	79.8	55.0	24.4	9.8	12.5
PATAMI growth %	45.1	125.4	149	-21.6	-54.9
EPS	82.04	56.59	25.07	10.1	12.8
NAS	4.22	3.17	2.39	2.16	2.02
ROE	19.4	17.8	10.5	4.7	6.7

For the whole FY15, revenue increases 9.1% YoY while PATAMI grows much more at 45.1% mainly due to full year contribution from acquisition of remaining LTIG shares.

RM31.6mil has been spent in FY15 for the purchase of PPE, including RM22mil for the laminating wood factory.

It has a net cash of RM76.5mil which should be its highest ever in its history.

Latitude does not pay attractive dividend. If it decides to pay 25% of its net profit for FY15, then it will be 20sen dividend, or 2.8% yield at share price of RM7.38.

Will Latitude continue to grow its top & bottom lines in FY16?

This may depend on US house sales & consumer spending, as well as its own production capacity.

Or will it make another acquisition with plenty of cash on hand?

At current share price of RM7.38, Latitude is currently trading at actual PE ratio of 9x.

Its share price has been standing tall during the bear run in August, perhaps investors are anticipating good financial result or bonus issue.

Can it still outperform the market in the rest of 2015?