Bloomberg - FFB:MK
Yahoo - 7229 .kl
Webpage - http://www.favellefavco.com/
Company
Profile
FAVCO comprise of two
international brands, Favelle Favco and Kroll. FAVCO focus on cranes products
such as Tower Cranes, Offshore Cranes, Crawler Cranes and Wharf Cranes. FAVCO
engaged in designing, manufacturing, supply, servicing, trading and renting of
cranes.
FAVCO has seven
operating facilities which are Malaysia, Australia, Denmark, USA, China,
Singapore and UAE.
Geographical Segments
:
FAVCO only split into
two geographical segments:
1) Inside Malaysia – 48.47% of 2016 revenue
2) Outside Malaysia – 51.53% of 2016
revenue
Financial
Statement
From 2016 Annual
Report, FAVCO intangible asset had decrease from RM 1,273,000 in 2015 to RM
323,000 in 2016. From contract work in progress and inventories in 2016, FAVCO
is expecting a decrease a sales in near future compared to the 2016.
Of the RM 366,837,000
of cash and cash equivalents, only 30.42% of the cash is kept as cash and bank
balance compared to 87.42% in 2015. These might indicated that management might
not want to use the money in the near future. Besides that, the fixed deposit
in bank is at lower rate in 2016 (0.76% - 1.70% per annum) compared to 3.25%
per annum in 2015.
PROS:
|
è Intangible asset had reduce by
74.62%
|
CONS:
|
è
Decrease in contract work in progress
and inventories for the year 2016.
è
Large cash place in short term
investment and fixed deposit which had low interest rate.
|
FAVCO had reduces it
borrowing from RM 64,011,000 in 2015 to 26,043,000 in 2016. These had brought
the interest coverage ratio for 2016 increase to 29.32 from 13.85 (in 2015).
PROS:
|
è FAVCO borrowing had reduce by
59.31%
è FAVCO interest coverage rato have
increase by 111.70%.
|
Dividend
and Bonus Issued for the past five year
FAVCO had constant
dividend for the past five year from 2012 – 2016 with the average dividend of RM
0.102 with the dividend yield of 3.6 %. Besides that in the past 5 years, FAVCO
had constantly increase it dividend pay to investors.
PROS:
|
è FAVCO had average dividend yield
of 3.6 % over the 5 year period which is higher than fix deposit
è FAVCO had constantly increase it
dividend pay to investor.
|
New
Issue of Securities
FAVCO had implemented
new share up to 10% of the total issued shares for eligible directors and
employees.
CONS:
|
è
New shares insurance to directors and
employees would dilute the share of FAVCO
|
Market
Research
Price Target : 2.92
- FACVO intends to acquired 70 % stake in:
a) Exact
Automation Sdn Bhd
Providing integrated industrial
automation solution of plant instrumentation and maintenance services.
b) Sedia
Teguh Sdn Bhd
Trading of specialised equipment in oil
and gasindustry.
c) Exact
AnalyticalSdn Bhd
Providing related engineering services
d) Exact
Oil & Gas Sdn Bhd
Trading and engineering of specialise item used in oil
and gas industry. Awards license from PETRONAS.
Price Target : 2.92
- Lower cost of sales and lower tax rate
- Decreasing orderbook
Price Target : 2.92
- Decline in demand for offshore cranes is cushions by increasing demand in tower cranes
- Should there any M&A exercises which involves cash, lower dividend payout ratio might be expected.
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