Saturday, 10 October 2015

Stock Review – GUH (3247) (GUH HOLDINGS BERHAD)


image source from Big Chart Marketplace

image source from Big Chart Marketplace
Bursa Malaysia - 3247
Bloomberg - GUH:MK
Yahoo - 3247 .kl
Webpage - http://www.guh.com.my/

Key Value Investor Criteria: -

Description
Value
Criteria
Point
Price to Tangible Book Ratio
0.50*
< 1
5/5
Stock Valuation
CAPM => 2.83%
Return (2008-2014) =>22.66 %
Undervalue by 19.83%
CAPM < Return
5/5
Return on Asset
2.94*
> 0
4/5
Return on Common Equity
4.17*
> 0
4/5
Quick Ratio
3.48*
>1
5/5
Long term Debt / Total Capital
-*
<50%
5/5
Continue Dividend over Past 10 Years / Since Inception
Yes
Yes
2/2
Cash From Operation
Positive > 5 years
Positive
5/5
Total Point


35/37
Note:
 *            Data obtain from Bursa Marketplace on 10/10/2015
By scoring 35/37 (94.59%), we will look into the annual report and the latest quarterly report of GUH before making the decision to buy the stock.

Company Profile

GUH diversified into too many segments, this company is not focus and specialised in one major segments. The segments which GUH into are as followed:
  1. Printed Circuit Board (31.08% of 2014 profit)
  2.  Unallocated Non-operating Segment (30.10% of 2014 profit)
  3.  Property Development (29.93% of 2014 profit)
  4. Water and Wastewater Treatment (6.38% of 2014 profit)
  5. Oil Palm Plantation (1.66% of 2014 profit)
  6. Electrical Appliances (0.86% of 2014 profit)


1)   Printed Circuit Board

GUH has two subsidiaries GUH Circuit Industry (PG) Sdn. Bhd and GUH Circuit Industry (Suzhou) Co. Ltd. The printed circuit board industry is competitive, GUH had to reduce the selling price of the printed circuit board to be competitive in the industry. Despite reduce selling price GUH manage to increase the sales volume and the profit after tax. GUH had started to print double layers printed circuit board in Malaysia plant. These will attract more Malaysia customer as printing the circuit board (small volume prototype) might still cheaper when doing in Malaysia instead of sending to China.

2)   Unallocated Non-operating Segment

I believe this segment is the power plant in Cambodia which GUH owning 20% of the Cambodia Utilities Pte. Ltd. The concession expired in May 2015 and there is no further extension on the concession. These means GUH will lost the profit from these segment which is around 30% of 2014 profit.

3)   Property Development

GUH has land in Seremban which allocated adjacent to Seremban / Labu interchange of North South Highway. Besides that it also owned 46 acres freehold land in Simpang Ampat, Pulau Pinang.

On September 2015, GUH had sign a Sale and Purchase agreement with Leader HoldingSdn Bhd (a private company own by the major shareholder company) in Seberang Perai Selatan, Pulau Pinang.

4)   Water and Wastewater Treatment

In 31 Dicember 2014, Teknoserv Engineering Sdn Bhd, subsidiary of GUH had secured RM 74.5 million contract which cover water and sewage plant in Malaysia. The management is planning to expand this division to South East Asia.

5)   Oil Palm Plantation

This year GUH is expecting to have more output from this division as the oil palm plant in 2006 would have reached it full maturity. However the declining of CPO price recently might effect the revenue of GUH on these division.

6)   Electrical Appliances

These division mainly focus on in house light fittings. However there are too many competitors in for light fitting oversea (Philips, Osram and China brands) and locally as well (Davis, SJ lite).

As an electrical engineer myself which designing the electrical system for buildings in Malaysia, I personally never heard before light fitting from GUH maybe their marketing is not as good as other.

PROS:

  • Malaysia printed circuit board plant in Malaysia is now able to print two layer printed circuit board.
  • Many electronic appliances now days (computer, hand phone, LED, etc) is using printed circuit board.
  • The land in Pulau Pinang is a prime piece of land.
  • More palm oil trees reach maturity this year.
CONS:

  • GUH had diversified into too many segment.
  • Printed circuit board industry is competitive, GUH force to reduce the selling price of the printed circuit board.
  • Combodia Utilities Pte Ltd concession expired in May 2015. These concession make up of GUH 30% profit for 2014.
  • Declining CPO price recently might affect the revenue of GUH.
  • GUH did not push hard on their light fitting.


Director of the company

GUH is owned by the Tan Sri Dato’ Seri H’ng Bok San and his family member. Tan Sri H’ng is one of the founder of GUH. He is an successful entrepreneur in Electrical and Electronic industries. He sit on board of Sarawak cable and own a private company, Leader Universal Sdn Bhd.

PROS:

  • Tan Sri H’ng is the founder of GUH and GUH is the only public listed company his family owned hence the H’ng family will do their best for the company.

Financial Statement

Based on the unaudited report for financial ending 30-06-2015, GUH does not make any loan. Besides that, GUH have also increase it cash and cash equivalent from RM 132,474,000 (December 2014) to RM 136,690,000 in June 2015. Next quarter ending 30-9-2015 might see a drop in revenue due to the end of the power concession in Cambodia.

Base on 2014 annual report, 44.63 % of account receivable is in Renminbi and 29.39% of account receivable is in US dollar. With the weakening of Malaysia Ringgit with Renminbi and USD recently, these might give a increase in revenue for GUH.

PROS:

  • GUH does not have any borrowing and have large amount of cash.
  • Have 44.63% of account receivable in renminbi and 29.39% in US Dollar, these might increase the revenue of GUH as the declining of Malaysian Ringgit recently.
CONS:

  • Drop in revenue from unallocated non-operating segment might be seen in the next quarter.