Poh Huat (2)

Santa Claus Came To Town

Publish date: Sun, 28 Dec 2014, 10:32 AM

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(Merry Xmas !!! Ho Ho Ho)

On Christmas Eve, Poh Huat released its financial results for the quarter ended 30 October 2014.

As expected, the result was excellent. I believe many Poh Huat shareholders must have been delighted when share price shot up 11 sen to RM1.41 on Boxing Day.  

					FY2013					FY2014
(RM mil)	Jan 13	Apr 13	July 13	Oct 13	Total	Jan 14	Apr 14	July 14	Oct 14	Total
Revenue	95.0	70.8	90.9	101.3	358.0	95.5	84.4	89.1	108.1	377.1
> Malaysia	39.1	28.2	29.2	31.1	127.6	33.4	35.7	34.7	34.5	138.3
> Vietnam	54.3	40.9	60.1	68.9	224.2	60.9	47.4	53.7	72.7	234.7
> others	1.6	1.6	1.7	1.3	6.2	1.2	1.2	0.8	1.0	4.2
PBT	6.2	0.6	2.6	10.1	19.5	7.1	3.4	4.4	13.3	28.2
> Malaysia	(0.4)	(2.2)	0.3	1.0	(1.4)	1.5	1.4	1.5	2.7	7.1
> Vietnam	6.9	3.2	8.3	10.0	28.4	5.3	3.1	3.6	10.4	22.3
> others	(0.2)	(0.3)	(6.8)	(1.0)	(8.3)	0.3	(1.1)	(0.7)	0.3	(1.2)
Net profit	4.8	0.2	1.3	10.3	16.6	6.3	2.5	3.8	11.1	23.8
EPS (sen)	4.2	0.2	1.1	9.1	14.6	5.5	2.2	3.3	10.4	22.3
USD : RM	3.053	3.085	3.117	3.233	3.122	3.250	3.282	3.210	3.221	3.241

Some key observations :-

(a) Turning around of Malaysia operation is the major contributor to FY2014 earnings growth. In FY2013, Malaysia operation reported loss before tax of RM1.4 million. In FY2014, it reported PBT of RM7.1 million, an improvement of RM8.5 million.

The Malaysia division mostly exports office furniture to Canada.

(b) At RM22 million, Vietnam operation remained the largest contributor, accounted for closed to 80% of group PBT. This division's profitability was adversely affected by the riot that happened in May 2014. Otherwise, PBT should be higher at closed to RM28 million (as per FY2013)  

(c) The group reported a massive drop in borrowings from RM47 million to RM35 million, a drop of RM12 million in a single quarter. With cash of RM53 million, the group is currently in net cash position.

(d) The Company declared additional 3 sen dividend, bringing FY2014 dividend per share to 8 sen. The Company has yet to fix the ex date for the 3 sen dividend. In the meantime, the 2 sen dividend announced on 31 October 2014 will go ex on 6 January 2015.

Concluding Remarks

This latest quarter result marks the group's return to normalcy after the May 2014 riot affected the July quarterly results. 

Going into 2015, the main theme will be US economic recovery and currency play (strong US Dollars). For FY2014, the average USD : RM exchange rate was 3.24. For the month of November and December 2014, the average exchange rate is 3.41, a difference of 5%. The strong USD should work in Poh Huat's favour and boast its earnings going forward.

At RM1.41, the stock is trading at PER of 6.3 times and dividend yield of 5.7%. I will leave it to you to interprete what it means.

Have a nice day.