Sunday, 2 July 2017

Stock Review – HOMERIZ (5160) Homeritz Coporation Berhad

Bursa Malaysia - 5160
Bloomberg - HMCB:MK
Yahoo - 5160 .kl

Webpage - http://www.homeritzcorp.com/


Company Profile

HOMERIZ is an integral designer, manufacture and exporter of a complete range of home furniture.

1) Customer Information :

HOMERIZ customers can be divided into the following geographical information base on 2016 Annual Report:

i)                  Asia and Pacific -  54.42 %
ii)               Americas and European Countries – 41.49 %
iii)            Africa and Middle East – 3.10 %
iv)            Malaysia – 0.99%

As from the annual report 2016 only 1 % of the 2016 revenue are from the Malaysia’s customer. Hence the weakening of Ringgit Malaysia will benefit HOMERIZ.

HOMERIZ consists of two (2) major customers as follows:

i)                  Customer A – 12.64 %
ii)               Customer B – 10.19 %

PROS:
è Able to benefit from the weakening of Ringgit Malaysia as 99% of the revenue are from country outside Malaysia and denominated in US Dollar.
CONS:
è HOMERIZ consists of two major customers which contributed to 22.83 % of the total revenue.

2) Factories:


Base on Mr Chua Fen Fatt, managing director told to the Edge Financial Daily on the earlier of the year, HOMERIZ operates six factories located in Muar, Johor.


Financial Statement


From the annual report 2016, there is goodwill of RM 478,506. These goodwill is tested for impairment annually. The 2016 discount rate for cash flow projection of is 8.10 % and growth rate of is 6.5 %.

The trade receivables of HOMERIZ had reduce from RM 8,622,706 to RM 3,715,977 while the revenue had increase from 146,418,585 to RM 157,566,985 hence the receivable turnover ratio had reduces from 0.055 to 0.024. These will result the days of saleoutstanding to reduce from 20 days to 9 days. Besides that the trade receivable had reduce from 25 % to 17 %.

PROS:
è Days of Sales Outstanding had reduced from 20 days (2015) to 9 days (2016)
è Trade receivable past due had reduce from 25 % (2015) to 17 % (2016)

CONS:
è RM 478,506 of goodwill.

Dividend

HOMERIZ had pay dividend constantly throughout the year. For the past 5 years (2012 – 2016) HOMERIZ had pay an average dividend RM 0.037 which is around 4% dividend yield.

PROS:
è HOMERIZ pay dividend constantly
è HOMERIZ had 5 year dividend yield of 4%

Warrant

Base on 2016 annual report there are still 49,990,000 warrant remaining. The warrant had exercise price of RM 0.92 with the exercise ration of 1:1. The warrant had an maturity date  0f 09 July 2020.