Stock Review – ANALABS (7083) (ANALABS RESOURCES BERHAD)

 

Bursa Malaysia - 7083

Bloomberg - ALR:MK

Reuters -  ANRE.KL

Webpage -  http://www.analabs.com.my/

Yahoo - 7083.kl

Sector            : Industrial Product & Services

Sub Sector    : Industrial Services

Focus             : Resin, Chemicals and Building Materials

Company Profile

Analabs Resources Berhad (ANALABS) has been involved in the environment and industrial related business since 1936 in Singapore and 1965 in Malaysia. ANALABS has diversify into five different segment:

1. Manufacturing Formulation and Sale of Resin, Chemicals and Building Materials

• Main segment of ANALABS contributed 76.21 % of 2021 total revenue.

• Involved in manufacturing, formulation and sale of resin, chemicals and trading of tiles.

• Would be affected by high raw materials price and exchange rate fluctuation.

• Profit margin had increase from 12.27 % in 2020 to 16.12 % in 2021

2. Recovery and Sale of Recycled Products

• Contributed 7.94 % of 2021 total revenue

• Involved in collecting, treating, recovering and recycling of industrial waste and sales of recycled products.

• Profit margin had increase from 1.90 % in 2020 to 19.82 % in 2021

3. Culture and Sale of Pawn

• Contribute 0.48 % of 2021 total revenue

• Involves in bleeding and selling prawns.

• This segment makes losses for most of the time.

4. Investing Holding and Property Letting

• Contributed 2.41 % of 2021 total revenue

• Involved in investment holding, management services and property letting.

5. Contract Work, Pipe Laying and Rehabilitation

• Second largest segment of ANALABS which contributed 12.96 % of 2021 total revenue

• Involved in General contracting

• The only segment in ANALABS which does not make loss in Q4 2020 (Quarter end April 2020)

• Profit margin had increased from 17.40 % in 2020 to 20.67 % in 2021.

Income Statement

	30 April 2021	30 April 2020	30 April 2019	30 April 2018	30 April 2017
Revenue	117,490,000	110,860,000	129,780,000	137,510,000	149,760,000
Cost of Goods Sales	93,590,000	90,520,000	115,300,000	113,700,000	120,700,000
Earning Before Tax	20,080,000	9,370,000	5,030,000	12,030,000	14,940,000
Nett Profit	17,310,000	8,690,000	4,060,000	10,070,000	11,190,000
5 Years CAGR of Revenue					-4.74 %
5 years CAGR of Nett Profit					9.12 %

Revenue of ANALABS had decreased over the year with a CAGR of  -4.74 %. ALABS had low net profit in 2019 due to surge of raw material cost and currency fluctuation. ANALABS nett profit had increase significantly for year 2021 which increase from RM 8,690,000 in 2020 to RM 17,310,000 in 2021, an increase of 99.19 %. The increase of net profit mainly due to higher profit margin.

Balance Sheet

	30 April 2021	30 April 2020	30 April 2019	30 April 2018	30 April 2017
Account Receivable	30,760,000	20,933,000	24,296,000	30,231,000	29,870,000
Percentage of Account Receivable Past Due	Pending AR 2021	80.99 %	46.54 %	27.38 %	27.27 %
Total Debt	75,210,000	53,030,000	33,260,000	22,810,000	17,450,000
D/E	0.27	0.21	0.12	0.09	0.07
Current Ratio	0.77	1.03	1.67	2.79	2.47
Cash / Current Asset	33.15 %	37.84 %	34.01 %	51.67 %	46.53 %

While waiting for 2021 annual report, ANALABS trade receivable past due for 2020 had raised a red flag by increasing from 46.54 % in 2019 to 80.99 % in 2020. In Addition, the debt for 2021 also increased from RM 53,030,000 in 2020 to RM 75,210,000 in 2021, an increase of 41.83 %. ANALABS current ratio had  also dropped to less than 1.0 for 2021 from 1.03 in 2020.

Cash Flow

	30 April 2021	30 April 2020	30 April 2019	30 April 2018	30 April 2017
Cash Flow from Operation	11,100,000	21,230,000	10,040,000	8,820,000	22,870,000
Cash Flow from Investing	-33,820,000	-31,640,000	-49,010,000	-3,460,000	-8,440,000
Cash Flow from Financing	18,580,000	13,720,000	3,410,000	4,880,000	-7,650,000
Free Cash Flow	10,760,000	20,310,000	4,170,000	3,420,000	21,290,000
5 years CAGR of Cash Flow from Operation					-13.46 %
5 years CAGR of Free Cash Flow					-12.76 %

ANALABS cash flow from financing is positive since 2018 which means ANALAB had been borrowing since 2018. Besides that, ANALABS 5 year CAGR of Cash Flow from Operation is -13.46 %.  ANALABS also had negative growth for free cash flow with CAGR of -12.76 %.

Per Share Analysis

	30 April 2021	30 April 2020	30 April 2019	30 April 2018	30 April 2017
Share Outstanding	108,930,000	108,950,000	108,950,000	112,210,000	112,210,000
Price 30 April	1.16	0.9	1.12	1.025	1.125
BV/Share	2.51	2.28	2.40	2.15	2.03
P/E	7.30	11.28	30.05	11.42	11.28
5 years CAGR of Price					0.61  %

ANALABS price is lower than book value per share, it is trading at 53.78 % discount. Asides that ANALABS has low P/E, the lowest P/E since 2017.

Dividend

	30 April 2021	30 April 2020	30 April 2019	30 April 2018	30 April 2017
Dividend Per Share	0.02	0.02	0.02	0.01	0.0325
Dividend Payout	12.59 %	25.07 %	53.67 %	11.14 %	32,59 %
Dividend Yield	1.72 %	2.22 %	1.79 %	0.98 %	2.89 %
10 year Malaysia Government Bond	3.16 %	2.89 %	3.81 %	4.15 %	4.09 %

ANALABS dividend yield is lower than 10 year Malaysia Government Bond.

Dupoint Analysis

	30 April 2021	30 April 2020	30 April 2019	30 April 2018	30 April 2017
Net Profit Margin	14.73 %	7.84 %	3.13 %	7.32 %	7.47 %
Asset Turnover	0.29	0.31	0.38	0.44	0.50
Equity Multiplier	1.43	1.39	1.27	1.24	1.25
Return of Equity	6.15 %	3.40 %	1.50 %	4.01 %	4.71 %

Net Profit Margin of ANALABS had increase from 7.84 % in 2020 to 14.73 % in 2021.

Asset turnover of ANALABS had decreased over the year from 0.5 in 2017 to 0.29 in 2021.

Equity Multiplier or Financial Leverage of ANALABS had increase from 1.25 in 2017 to 1.43 in 2021.

Growth Rate

5 year average ROE (AROE)	3.95 %
5 year average dividend payout ratio (ADPR)	27.01 %
Ground Rate (GR = AROE x (1-ADPR))	3 %

ANALABS had a growth rate of 3 %.

Capital Asset Pricing Model (CAPM)

Beta of ANALABS	0.29
Risk Free Rate (10 year Malaysia Government Bond)	3.24 %
Expected Return (ROE)	3.95 %
Cost of Equity = Risk Free Rate + Beta (ROE - Risk Free Rate)	3.45 %

Altman Z Score Model

Altman Z Score model is use to predict the chance of business going bankrupt in two years. ANALABS had a Z score of 2.38 in 2020

Z Score	Zone
< 1.8	Distress Zone (Likely to bankrupt)
1.8 to 3.0	Uncertain Zone
> 3.0	Safe Zone

Research Report

No recent research report

Peer Analysis 

	ANALABS	JAG	TEXCYCL	LUXCHEM
P/E	8.43	12.93	19.35	12.36
Dividend Yield	1.74	0	0	4.14

Technical Analysis

ANALABS daily chart does not show any trend.

ANALABS weekly chart show ascending triangle, uptrend continuing if price break RM 1.170.

Maximum drawdown for ANALABS is 29.44 %.

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