Stock Review – HIGHTEC(7033) (KUMPULAN H & L HIGH-TECH BERHAD )

Bursa Malaysia - 7033

Bloomberg - H&L:MK
Yahoo - 7033 .kl
Webpage - http://www.hlhightech.com/

Key Value Investor Criteria: -

Description	Value	Criteria	Point
Price to Tangible Book Ratio	0.57*	< 1	5/5
Stock Valuation	CAPM => 2.94% Return (2008-2014) =>2.12 % Overvalue by 0.82%	CAPM < Return	0/5
Return on Asset	2.16*	> 0	3/5
Return on Common Equity	8.56*	> 0	5/5
Quick Ratio	4.67*	>1	4/5
Long term Debt / Total Capital	8.35*	<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			29/37

Note:

 *            Data obtain from Bursa Marketplace on 14/11/2015

By scoring 29/37 (78.38%), we will look into the annual report and the latest quarterly report of HIGHTEC before making the decision to buy the stock.

Company Profile

HIGHTEC has four major operating segment which are:

1. Manufacturing and Trading (23.44% of 2014 profit)
2. Investment (72.56% of 2014 profit)
3. Plantation (-4.12% of 2014 profit)
4. Joint Property Developer (8.12% of 2014 profit)

1)   Manufacture and Trading

HIGHTEC start with manufacturing precision engineering plastic mound and precision metal product in 1976 under the name of Hup Lee Enginnering Work. HIGHTEC now operating in three location, two in Sungai Buloh Malaysia and one in Thailand.

HIGHTEC has serves into various industries such as Automotive, Electrical, Industrial and Medical. HIGHTEC has their product export to various country such as Australia, China, Indonesia, Japan, UK, US and etc.

2)   Investment

This division is where HIGHTEC got most of their profit from in 2014 (72.56%). This division rent out factories and warehouse to others.

HIGHTEC has five number of factory units in Taman Mayang and one number of warehouse in Shah Alam are currently rented out.

3)   Plantation

HIGHTEC start into palm oil plantation in mid 2013 where they signed rental agreement with various native to convert the land in Bintulu Sarawak into oil palm plantation.

The rental agreement allows HIGHTEC to use the land rental free for three and the half year from execution of the rental agreement which mean until 2017 for 60 years.

Some of the oil palm tree starts bearing fruits since first half of 2015.

4)   Joint Property Developer

In 2014, HIGHTEC has 3 plot of lands held for property development which are one in Ipoh and two in Kuala Selangor.

In 2014, this division just got the revenue from the 66 units of houses sold.

PROS:

The depreciation of Ringgit Malaysia might increase the profit of HIGHTEC due to foreign currency exchange gain. Rent our factory units and warehouse space will be passive income for HIGHTEC which the management able to use to cover the operating cost of HIGHTEC. Some of the oil palm tree start bearing fruit since first half of 2015.

CONS:

The Automative industry may slowdown next year which might affect the revenue of HIGHTEC

Financial Statement

By looking at the quarterly report for the period ending 31 JULY 2015 HIGHTEC has low amount of borrowing RM 7,224,000 compared to their cash equivalent in hand which is RM 15,070,000. Besides that the operating cash flow also increase compare to the previous year.

PROS:

HIGHTEC had low amount of borrowing. Increase operating cash flow.

Summary of Stock Reviews

Stock Review – KIMHIN(5371) (KIM HIN INDUSTRY BERHAD)

Bursa Malaysia - 5371

Bloomberg - KHI:MK
Yahoo - 5371 .kl
Webpage - http://www.kimhin.com.my/

Key Value Investor Criteria: -

Description	Value	Criteria	Point
Price to Tangible Book Ratio	0.57*	< 1	5/5
Stock Valuation	CAPM => 2.99% Return (2008-2014) =>3.82 % Undervalue by 0.83%	CAPM < Return	2/5
Return on Asset	2.19*	> 0	3/5
Return on Common Equity	5.33*	> 0	5/5
Quick Ratio	2.17*	>1	4/5
Long term Debt / Total Capital	1.88*	<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			31/37

Note:

 *            Data obtain from Bursa Marketplace on 14/11/2015

By scoring 31/37 (83.78%), we will look into the annual report and the latest quarterly report of KIMHIN before making the decision to buy the stock.

Company Profile

KIMHIN is focusing manufacturing and sales of ceramic tiles. KIMHIN had manufacturing plants in Seremban (Malaysia), Kuching (Malaysia) and in China. Currently KIMHIN had operation sets up in four countries which are:

1. Malaysia – Manufacture and sales (51.44% of 2014 profit)
2. Australia – sales (30.47% of 2014 profit)
3. China – manufacture and sales ( 18.88% of 2014 profit)
4. Vietnam – sales

In May 2014, KIMHIN had acquired 100% equity interest of Norcos Industry Pty Ltd and change it to Kin Him Australia Pty. Ltd. With the acquisition, KINHIM is able to expand in Australia and New Zealand market. Besides that, KINHIM also obtain royalty – free licence to use the trademark of “Johson Tiles” for fifty year, a well-known ceramic tile name in UK. 

PROS:

KIMHIN had expand the market to Australia and New Zealand by acquired Norcos Industry Pty Ltd. With the trademark of “Johson Tiles” which is a premium product selling at higher price. KINHIM might increase their revenue.

Financial Statement

By looking at the financial statement for the 2015 annual report and for the quarter ending 30 June 2015, KIMHIN has low amount of borrowing RM 9,696,000 compared to their cash equivalent in hand which is RM 47,922,000.

Besides that the operating cash flow generated for the first 6 months in 2015 (RM 31,373,000) is almost the same as the cash flow generated throughout the whole financial year of 2014 (RM 32,879,000).

PROS:

KIMHIN had low amount of borrowing. Cash flow generated within the first 6 months is almost the same as the cash flow generated for the financial year 2014.

Shareholder

Besides Kim Hin (Malaysia) Sdn Bhd which owed 61.45% of the shares. KIMHIN also manage to attract foreign investor such as China Cruise Company Ltd (1.841%) & Yeoman 3 Rights (1.782%). If you guys follows my blog, you guy would notice Yeoman 3 Rights very familiar. Yes Yeoman 3 Rights bought AJIYA before the price shoot up 60%.

PROS:

KIMHIN able to attract foreign investor

Summary of Stock Reviews