Bloomberg - FFB:MK
Yahoo - 7229 .kl
Webpage - http://www.favellefavco.com/
Webpage - http://www.favellefavco.com/
Sector : Industrial Products and Services
Sub Sector :Industrial Engineering
Company Profile:
FAVCO revenues divided into two location, inside Malaysia and outside Malaysia.
3) Current Ratio
1) Inventory Turnover (Blue Line)
2) Trade Receivables Turnover (Red Line)
3) Trade Payable Turnover (Green Line)
1) Earnings per share
Company Profile:
FAVCO comprises of two international brands, Favelle
Favco and Kroll. FAVCO owned the world largest hammerhead crane and largest
luffing tower crane.
FAVCO have 7 operating facilities around the world,
Australia, Malaysia, Denmark, United State of America, China, Singapore and
United Arab Emirates.
Revenue:
FAVCO revenues divided into two location, inside Malaysia and outside Malaysia.
From the pie chart above, FAVCO market segment is
about 45 % domestic market and 55 % international market.
Bar chart above shows revenue and operating margin
of FAVCO from 2010 to 2018.
5 Years Annualise Growth of Revenue
|
-7.04 %
|
9 Years Annualise Growth of Revenue
|
-0.09 %
|
FAVCO is in declining business its revenue had
decrease significantly from its peak in 2015. FAVCO 5 years annualise growth of
revenue is -7.04 %.
The drop in revenue in cranes business might had
cause FAVCO diversified into intelligent automation business on 3rd
July 2018 by invested RM 137,000,000 in the acquisition of 70 % of Exact Group.
Nett
Profit
Bar Chart below shows FAVCO nett profit from 2010 –
2018.
5 Years Annualise Growth of Nett
Profit
|
1.08 %
|
9 Years Annualise Growth of Nett
Profit
|
10.56 %
|
FAVCO nett profit had lesser impact on the revenue
drop for the recent year while maintaining positive annualise growth of 1.08 %
for the past 5 years mainly because FAVCO able to increase its operating profit
margin from 12.98 in 2015 to 16.08 in 2018.
Increase of operating profit might cause by FAVCO
penetrate into small crane market and rental fleet.
Assets
and Liabilities
FAVCO assets had growth at a constant rate at 9.6 %
per year over the past 9 years while the liabilities is growing at a lower rate
of 5.4 %.
Trade
Receivables
FAVCO have high trade receivable past due that of
around 70 % of the trade receivables in
2010 and drop to 50 % in 2018. This high trade receivable past due had put
FAVCO on financial risk if not handle in proper manner and default could happen
when the economy is able.
Financial
Ratio
There would be few financial ratios to be look at
here:
1) Interest
Coverage Ratio (Green Bar Chart)
2) Cash
Ratio (Blue Line Chart)
3) Current
Ratio (Red Line Chart)
1) Interest
Coverage Ratio
Interest coverage ratio measure how
capable the company pay off the existing debt. With an interest coverage ratio
above one mean the earnings before interest & tax (EBIT) is able to pay of
the full amount of the financial cost of the year.
Despite lower EBIT in the recent
year, FAVCO manage to maintain a high interest coverage ratio which mean FAVCO
had low financial cost in the recent year.
2) Cash
Ratio
As cash is the most liquid assets
of the company, cash ratio is use to determine company ability to pay off short
term liabilities using cash. Cash ratio above one indicates that company able
to settle all current liabilities using available cash.
FAVCO cash ratio had increase over
the period however FAVCO cash ratio is still below one. FAVCO current only
managed to cover 60 % of its current liability with cash.
3) Current Ratio
Current ratio measures ability of
the company to pay off short term obligation (current liabilities). Current
ratio above one means the company able to pay off the current liabilities with
current asset.
FAVCO current ratio had increase
over the years and it is above one.
Turnover in Days
Let
look into three types of turn over as follow:
1) Inventory Turnover (Blue Line)
2) Trade Receivables Turnover (Red Line)
3) Trade Payable Turnover (Green Line)
1) Days
Sales of Inventory
9
Years Days Sales of Inventory Median (days) – 135
FAVCO days sales of inventory show
a U shape which means FAVCO inventory (cranes) are very selling fast in 2013
(100 days) when the Malaysia construction is at its peak and slowly down to 165
days in 2018.
2) Trade
Receivable Turnover (Days)
9
Years Trade Receivable Turnover (Days) – 131
FAVCO trade receivable turnover is
quite consistence over the period with the average of 131 days
3) Trade
Payable Turnover (Days)
9
Years Trade Payable Turnover (Days) – 135
FAVCO trade payable turnover pretty
much following it days sales of Inventory. In 2018 FAVCO manage to get the
trade payable turnover (145 days) higher than the trade receivable turnover
(131 days). FAVCO is less likely to have problem with the cash flow despite 50
% of the trade receivables are past due in 2018.
Per Share Analysis
1) Earnings
per share (sen) (Blue Bar)
2) Dividend
per share (sen) (Red Bar)
3) Net
total assets per share (Green Line)
1) Earnings per share
FAVCO earnings per share slow a
decrease since year 2016.
2) Dividends
per share
Although decreasing earnings since
2016, FAVCO still maintaining high dividend per share to the shareholder. In year
2016 - 2018 FAVCO management had decided to use 44% to 53 % of the earning to
pay out as dividend while before that the dividend payout ratio is just around
18 % to 28 %.
3) Net
total assets per share
FAVCO net total assets had growth
consistently since with a rate of 11.02% per annum over the past 5 year.
Director’s Remuneration
Some
company paid high remuneration to director despite low profit. Let see how much
is FAVCO director’s remuneration in comparison to staff fee and operating
profit.
On
average FAVCO director remuneration is around 4.7 % of the total salaries
expenses.
FAVCO
director’s remuneration does not reduce despite poor performance since 2017
which make percentage against operating profit increase to 17.63 % instead of
11.68% on average.
Market Report
Date
|
Research House
|
Target Price
|
27/2/2020
|
3.41
|
|
27/2/2020
|
3.74
|
|
26/2/2020
|
3.65
|
|
Average Target Price
|
3.60
|
