Saturday, 12 December 2015

Johore Tin (7)

Finally Delivered A Strong Set Of Results

Author: Icon8888   |   Publish date: Wed, 26 Aug 2015, 09:48 PM 

Johore Tin Bhd (JOHO) Snapshot

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52 Week High
04/3/15 - 1.65
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08/25/15 - 1.21
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Johore Tin released its June 2015 quarterly result today. 

With net profit of RM6.7 mil, latest quarter EPS is approximately 7.2 sen.

After several quarters of disappointment, I am extremely pleased with the results.

With raw material cost continued to be low and Ringgit weak (which augurs well for the group as it exports more than 70% of its products), the latest quarter's strong performance should be sustainable. I expect the group to continue to perform well going forward. 

Based on annualised EPS of 28.8 sen and latest share price of RM1.28, prospective PER is 4.4 times only.

In the March 2015 quarter, Johore Tin's balance sheet deteriorated and alarmed investors.

However, in this latest quarter, there is clear improvement, with various important figures reverting to historic norm.     

(a) Inventories    In March 2015, inventories spiked to RM148 mil. The ratio of Inventories / Revenue increased to 1.63 times, siginficantly higher than the historic norm of 1 to 1.2 times. This high level of inventories alarmed many investors as they questioned the rationale for stockpiling.

Fortunately, in this latest quarter, inventories had declined to RM112.7 mil. This level is considered reasonable as it is 0.99 times of revenue, in line with historic norm.

(b) Borrowings    In the latest quarter, total borrowings declined to RM77.8 mil, 25% lower than the previous quarter's RM104.4 mil. This is definitely a positive development. Net gearing is at a very comfortable 0.29 times. 

Concluding Remarks

I very seldom explicitly recommend my readers to take position in a particular stock. Usually I will drop hints here and there if I feel that it makes sense to invest.

However, for this particular stock, I encourage you to have some exposure. My cost is approximately RM1.50. You are more lucky than me as you now have opportunity to buy at RM1.28.

But of course, investment is an art, not exact science. So please don't blame me if you loss money in the future.

Buy at own risk.  


p/s : If you want to learn more about this company, please refer to the articles below.

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