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

Stock Review – IGB(1597) (IGB CORPORATION BERHAD)

Bursa Malaysia - 1597

Bloomberg - IGB:MK
Yahoo - 1597 .kl
Webpage - http://www.igbcorp.com/

Key Value Investor Criteria: -

Description	Value	Criteria	Point
Price to Tangible Book Ratio	0.76*	< 1	5/5
Stock Valuation	CAPM => 2.90% Return (2008-2014) =>11.63 % Undervalue by 8.73%	CAPM < Return	4/5
Return on Asset	4.5*	> 0	4/5
Return on Common Equity	5.15*	> 0	5/5
Quick Ratio	0.95*	>1	2/5
Long term Debt / Total Capital	23.08*	<50%	4/5
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 25/10/2015

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

Company Profile

IGB had many segment of business which mainly focus on property. The main segment of IGB are as follows:

1. Property Investment - retail (63.78% of 2014 profit)
2. Property Investment - commercial (17.91% of 2014 profit)
3.  Hotel (8.58% of 2014 profit)
4. Property Development (1.37% of 2014 profit)

1)   Property Investment – retail

IGB retail division is represents by IGB REIT. IGB REIT consists of 2 malls, Mid Valley Megamall and The Garden Mall. Both malls located in a strategies location between Kuala Lumpur, Bangsar and Petaling Jaya. Both malls have 100% occupancy rate.

2)   Property Investment – commercial

These division owned office towers in Mid Valley City. The office towers are Mid Valley Southkey, The Garden North & South Tower, Center point North and South, Menara IGB, Hampshire Place, Menara Tan & Tan, Plaza Permata, The AmWalk & North Point.

There is another office tower, South Point target completion in 2016. The new office block will start provided revenue to IGB in 2016.

3)   Hotel

IGB owned several hotel in Kuala Lumpur, Penang, Ipoh, Sabah and one in Yangon, Myamar. In 2015 there are soft opening of 3 Hotels, St Giles Wembly-Premier Hotel, Cititel Express Penang, and Cititel Express Ipoh. These new hotel will give revenue to IGB in year 2015.

4)   Property Development

Most of the property development project done by IGB is in Kuala Lumpur. Kuala Lumpur is the capital of Malaysia and is the prime location for property development.

There are 2 projects which just launch end of 2014, Damai Residential and Park Manor. Besides that, G Tower is completed and handover progress while Three28 Tun Razak is expecting to complete in 2 Quarter 2016. G tower and Three28 Tun Razak may will give in revenue to IGB for the financial year 2015 and 2016.

IGB also had enter a joint venture with Mitsubishi Jisho Residence to develop a land within the vicinity of KLCC.

5)   Others

Besides the above four segments, IGB also had enter into education segment (IGB international school) and construction segment. IGB construction team is building a shopping like Mid Valley Megamall in Johor named Southkey Megamall.

PROS:

Owned Midvalley Megamall and The Garden Mall which located in a logistic location between Bangsar, Kuala Lumpur and Petaling Jaya. Once the South Point completed there will be increase of revenue for IGB. 3 new hotel soft launch in 2015, these will increase the revenue of IGB. Most property development projects done by IGB is in Kuala Lumpur.

Director of the company

IGB is mainly owned by the Tan family through Goldis Berhad which owned 73.32% of IGB (as of 31 March 2015).

The current group managing director, Dato’ Seri Robert Tan is from the second generation of the Tan family. He took over IGB from his father Mr Tan Kim Yeoh the co founder of IGB forerunner Ipoh Garden Berhad which focus property development in Australia.

Since Dato’ Seri Robert Tan took up his new position in IGB in 1995, he had works on the IGB first major project of IGB in Malaysia, Mid Valley City.

PROS:

Dato’ Seri Robert Tan had managed IGB for 20 years and brings IGB to its current status.

Financial Statement

From the annual report 2014, IGB short term borrowing had increase from RM 163,460,000 to RM 575,288,000 and long term borrowing increase from RM 1,394,909,000 to RM 1,571,267,000. From the recent quarterly report for financial period end 30-6-2105 the short term borrowing further increase to RM 829,517,000.

From the annual report 2014, there is RM 1,592,254,000 had to be paid of in the period of 5 years. While 1,256,267,000 is about to due in 2016 which is 78.9% of the loan. The is worrying me because if IGB is going to take off all the cash reserve to paid the loan of RM 1,256,267,000 next year and there still lack RM 175,384,000 (base on the cash reserve in 30-6-2015). However they can have another loan or issue share place which will dilute the IGB shares.

CONS:

The short term borrowing of IGB had increase significantly. RM 1,256,267,000 (78.9% of the total loan during in 5 year time) is going to be due in 2016. IGB cash reserve is insufficient to pay the RM 1,256,267,000 loan in 2016.

Summary of Stock Reviews