Stock Review – POHUAT (7088) (POH HUAT RESOURCES HOLDINGS BERHAD)

Bursa Malaysia - 7088

Bloomberg - PHR:MK
Yahoo - 7088 .kl
Webpage - http://www.pohhuat.com/

Company Profile

POHUAT has 30 years experiences in producing world class office system and furniture system. POHUAT has intergraded manufacturing facilities in Malaysia and Vietnam. POHUAT products are AT Office System and At Home System.

1) Geographical Information

POHUAT is operated in two major locations which are:

1) Vietnam – 55.30 % of 2018 revenue

2)  Malaysia – 44.70 % of 2018 revenue

2) Major Customer

POHUAT has three customers which are:

1) Customer A – 25.23 % of 2018 revenue

2) Customer B – 17.91 % of 2018 revenue

3) Customer C – 9.99 % of 2018 revenue

CONS:

è POHUAT has three customers represent 53.13 % of 2018 total revenue.

Financial Statement

POHUAT Property, Plant and equipment had increase from RM 137,103,111 in 2017 to RM 162,361,950 in 2018, increase by 18.42 %. On 21 January 2018, there was a fire destroying one of the five factories of a subsidiary. On 17 July 2018, POHUAT acquired 3,212 square meters detached warehouse cum office showroom in Cranbourne West, Victoria, Australia for a total cash of AUD 4.95 million ( RM 14.99 millions).

POHUAT Deposit, bank and cash balances had decrease by 3.2 % which is from RM 92,857,041 in 2017 to RM 89,887,631 in 2018.

There is RM 1,085,961 non current asset held for sale as POHUAT is planned to sell 2 units of warehouses in South Africa.

CONS:

è 21 January 2018, there was a fire destroying one of the five factory of a subsidiary. è 17 July 2018, POHUAT acquired warehouse cum office showroom in Australia but POHUAT had no operating revenue from Australia in 2018 è Planning to sell 2 units of warehouses in South Africa è Deposit, bank and cash balance had decrease by 3,2 %.

POHUAT bank borrowing had decrease from RM 21,991,818 in 2017 to RM 18,485,177, decrease by 15.95 %.

PROS:

è Bank Borrowing had decrease by 15.95 %

Financial Ratio

Description	2018	2017	Different
Gross Profit Margin	0.16	0.20	-0.04
Net Profit Margin	0.08	0.09	-0.01
Interest Coverage Ratio	46.66	45.56	+1.10
Effective Tax	0.18	0.17	+0.01

Warrant

At 23 January 2019 POHUAT had 46,903,027 warrants unexercised with the exercised price of the warrants to be RM 1.00 expired date of 21 Oct 2020.

CONS:

è The Warrants are in of money and warrant maturity date is about one and half years. There would be more warrants convert into shares which would dilute the share price.

Dividend and Bonus Issued for the past five year

POHUAT had constant dividend for the past five year from 2014 – 2018 with the average of RM 0.0417 included adjustment of subdivide on 16 October 2015 with the dividend yield of 2.71 % base on POHUAT stock price of RM 1.54 on 22/4/2019

CONS: è POHUAT had dividend yield of 2.71% for the past five year which is lower than fixed deposit 3.15%.

Market Research

Asia Analytica Sdn Bhd (20 March 2019)

Price Target : RM 1.59

·       Consistently strong sales growth for Malaysia operation

·       Higher sales volume for Vietnam operation

Affin Hwang Capital (15 March 2019)

Price Target : RM 1.71

·       Higher contribution from both Malaysia and Vietnam Operation

Estimated Price

IVKLS Price : RM 1.84

Peers

1)   LIIHEN

2)   LATITUD

3)   HOMERITZ

4)   WEGMAS

5)   SYF

6)   JAYCORP

7)   SWCAP

8)   DPS

9)   HHGROUP

10) SHH

Industry Comparison - Furniture

Summary of Stock Reviews

Stock Review – HOMERITZ (5160) (HOMERITZ CORPORATION BERHAD) -2

Bursa Malaysia - 5160

Bloomberg - HMCB:MK
Yahoo - 5160 .kl
Webpage - http://www.homeritzcorp.com/

Company Profile

HOMERITZ engaged in the design, manufacture and sale of upholstery furniture products in Malaysia. HOMERITZ primary undertake Original Design Manufacturing (“ODM”) and Original Equipment Manufacturing (“OEM”). HOMERITZ had its own brand which is “Eritz”.

1) Geographical Information

HOMERITZ is operated in four major locations which are:

1) Asia and Oceania (Excluding Malaysia) – 60.01 % of 2018 revenue

2) Americas and European Countries – 36.05 % of 2018 revenue

3) Malaysia – 2.56 % of 2018 revenue

4) Africa and Middle East – 1.37 % of 2018 revenue

2) Major Customer

HOMERITZ had three major customer with revenue equal to or more than 10% of the Group revenue:

1) Customer A – 14.05 % of 2018 revenue

2) Customer B – 12.73 % of 2018 revenue

3) Customer C – 11.78 % of 2018 revenue

CONS:

è HOMRITZ had three major customers which contributed 38.56 % of the 2018 revenue

Financial Statement

Trade receivables for 2018 had increase from RM 8,449,687 (2017) to RM 11,288,608 (2018) by RM 2,838,921 or 33.60 %. However the trade receivable pass due had significant decrease from RM 403,660 (2017) to RM 1,949 (2018) 99.52 % decrease.

Ficed Deposit with licensed banks had increase from RM 29,000,000 (2017) to RM 34,727,346 (2018), 19.75 % increase. Besides that interest rate range also increase from 3.70 % - 3.90 % (2017) to 3.50 % - 4.28 % (2018).

PROS:

è Almost no trade receivable had past due è Interest range in licensed bank increase to 3.50% - 4.28 %

CONS:

è Significant drop (99.52 %) of the trade receivable had past due

There is an increase in trade payable from RM 4,254,285 (2017) to RM 7,148,471 (2018), 68.03 % increase.

CONS:

è 68.03 % increase in trade payables account.

Financial Ratio

Description	2018	2017	Different
Gross Profit Margin	0.44	0.48	-0.04
Net Profit Margin	0.13	0.18	-0.05
Interest Coverage Ratio	N/A	N/A	N/A
Effective Tax	0.23	0.21	+0.27

Warrant

At 5 December 2018 HOMERITZ had 49,990,000 warrants unexercised with the exercised price of the warrants to be RM 0.92 which are higher than stock price, RM 0.595 on 12/4/2019.

PROS:

è The Warrant is out of money hence does not consider in the stock price

Dividend and Bonus Issued for the past five year

HOMERITZ had constant dividend for the past five year from 2014 – 2018 with the average dividend of RM 0.0402 included adjustment of bonus issued 1:2 on 3 July 2015 with the dividend yield of 6.76% base on HOMERITZ stock price of RM 0.595 on 12/4/2019.

PROS: è HOMERITZ had dividend yield of 6.76% for the past five year which is higher than fixed deposit 3.15%.

Market Research

HongLeong InvestmentBank (24 January 2019)

Price Target : RM 0.82

Estimated Price

IVKLS Price : RM 0.66

Peers

1)   LIIHEN

2)   LATITUD

3)   POHUAT

4)   WEGMAS

5)   SYF

6)   JAYCORP

7)   SWCAP

8)   DPS

9)   HHGROUP

10) SHH

Industry Comparison - Furniture

Summary of Stock Reviews