Wednesday, 18 October 2017

Stock Review – HEXZA (3298) HEXZA CORPORATION BERHAD

Bursa Malaysia - 3298
Bloomberg - HEX:MK
Yahoo - 3298 .kl
Webpage - http://www.hexza.com.my/


Company Profile

HEXZA had involved in property development and manufacturing of chemical product. HEXZA had manufacture formaldehyde resins, ethyl alcohol, natural vinegar and beverage (Enchante).

Major Product:

HEXZA revenue mainly come from one major product which is formaldehyde based resin and ethanol. These product contributed 91.66 % of HEXZA revenue.

Financial Statement


Base on 2016 annual report, HEXZA had increase in other investments from RM 46,824,851 in 2015 to RM 63,725,550 in 2016. The major change in other investments is contributed by share quoted outside Malaysia which is RM 22,295,885 compare to RM 2,540,847 in 2015. Other investment in Myanmar experience delays in lease rental collection.

Besides that, in 2016 HEXZA reported RM 26,787,284 in finance lease receivable. These is due to a sale & purchase and leaseback agreement to acquire part of the equipment for a 8 MW heavy fuel oil power generator system worth USD 6,000,000 (RM 24,168,000) from Tembusu Industries Pte Ltd. The lease commencing on July 1 2015 with a period of 10 years and monthly lease rental of USD 130,205 (RM 524,466).

HEXZA had other receivable which had past due more than 120 days of RM 54,537.

There is decrease in other asset from RM 20,014,468 in 2015 to RM 357,579 because in 2015 there is progressive payment made by Tembusu Industries Ptd Ltd to acquired 8MW heavy fuel oil generator which is RM 19,671,600.

Although the cash and cash equivalent had decrease from RM 62,150,011 to RM 51,417,413, HEXZA managed to increase the interest for the cash and cash equivalent which are:
1) Fixed and Short term deposit from 1.20% - 3.60% in 2015 to 2.25% - 6.00% in 2016
2) Money market fund from 2.82% - 5.05%  in 2015 to 2.75% to 5.55% in 2016.


PROS:
è HEXZA receive monthly rental of USD 130,205 from Tembusu Industries Pte Ltd until 2025 for leasing of 8 MW generator.
è HEXZA manage to increase the interest rate for cash and cash equivalent.

CONS:
è 36% increase in other investments contributed by share quoted outside Malaysia.
è Other investment in Myamar experience delays in lease rental collection.
è HEXZA capitalise the rental receive from Tembusu Industries Pte Ltd which woud overstated it asset.
è Having other receivable which had past due more than 120 days of RM 54,537.

HEXZA had no borrowing as of 30 June 2016

PROS:
è HEXZA had no borrowing

Dividend and Bonus Issued for the past five year

HEXZAhad constant dividend for the past five year from 2012 – 2016 with the average dividend of RM 0.046 with the dividend yield of 4.81 %.

PROS:
è HEXZA had average dividend yield of 4.81 % over the 5 year period which is higher than fix deposit

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