Author: Icon8888 | Publish date: Tue, 2 Jun 2015, 03:15 PM
Poh Huat will release its April 2015 quarterly results by end of this month (June 2015). Traditionally, April and July quarters are weak while October and January quarters' net profit are almost 100% higher.
The seasonality of net profit is primarily related to its Vietnam operation, which exports home furnitures to the US, the demand of which is strongest in the October and January quarters.
However, in latest two quarters, the Group's Malaysian operations had turned around substantially pursuant to internal restructuring.
Previously with PBT of only RM1 mil plus, the Malaysian division reported PBT of RM4.1 mil in January 2015 quarter, narrowing the gap with its Vietnam division.
The Malaysia division exports office furniture primarily to Canada. Unlike sales to US, this division is not so affected by seasonality.
In my opinion, the higher weightage of the Malaysia division's contribution to proftibility will help to smooth out the seasonality effects traditionally associated with Poh Huat. In other words, there is likelihood that the coming quarter result will not be as weak as previous years.
| (RM mil) | Jan13 | Apr13 | Jul13 | Oct13 | Jan14 | Apr14 | Jul14 | Oct14 | Jan15 |
| Revenue | 95.0 | 70.8 | 90.9 | 101.3 | 95.5 | 84.4 | 89.1 | 108.1 | 105.1 |
| > Msia | 39.1 | 28.2 | 29.2 | 31.1 | 33.4 | 35.7 | 34.7 | 34.5 | 36.4 |
| > Vnam | 54.3 | 41.0 | 60.1 | 68.9 | 60.9 | 47.4 | 53.6 | 72.7 | 67.7 |
| > others | 1.5 | 1.6 | 1.6 | 1.3 | 1.2 | 1.3 | 0.8 | 1.0 | 1.0 |
| PBT | 6.2 | 0.6 | 2.6 | 10.0 | 7.1 | 3.4 | 4.4 | 13.3 | 10.0 |
| > Msia | (0.4) | (2.2) | 0.3 | 1.0 | 1.5 | 1.4 | 1.5 | 2.7 | 4.1 |
| > Vnam | 6.9 | 3.2 | 8.3 | 10.0 | 5.3 | 3.1 | 3.6 | 10.4 | 5.8 |
| > others | (0.2) | (0.4) | (6.1) | (1.0) | 0.3 | (1.0) | (0.7) | 0.3 | 0.2 |
| Net profit | 4.8 | 0.1 | 1.3 | 10.6 | 6.3 | 2.6 | 3.9 | 11.0 | 8.2 |
| EPS (sen) | 4.5 | 0.1 | 1.2 | 9.9 | 5.9 | 2.4 | 3.6 | 10.4 | 7.7 |
(Icon8888) Poh Huat (Part 4) - Re-Rating Might HappenSooner Than Expected
Author: Icon8888 | Publish date: Sat, 11 Jul 2015, 01:06 PM
Compared to other furniture stocks, Poh Huat's share price has not been so dynamic. I believe this is due to perception that Poh Huat's business is seasonal. Referring to table below, many people would have concluded that October and January are strong quarters, while April and July are weak quarters.  If that is true, then the coming July quarter results, to be released by end September 2015, will continue to be weak. Excitement will only come in by end of December 2015 (6 months from now) when the October quarter is released. As such, many people feel that the stock is unlikely to go anywhere from now until December 2015. With that perception, no wonder Poh Huat share price has been lethargic. However, as I took a closer look at Poh Huat's historical figures, I discover that this is not necessarily the case. Contrary to popular belief, Poh Huat only has ONE weak quarter (the April quarter that was just released last week). The coming July quarter will be strong. The reason is because the FY2013 July quarter was distorted by provision of bad debts of RM6.75 mil while the FY2014 July quarter was distorted by riot in Vietnam, which adversely affected Poh Huat's operation.  (Angry crowd is bad for business) It was just a conincidence that in both years, certain bad things happened during July quarter !!!  Without those exceptional items, July quarter net profit for FY2013 and FY2014 would have been RM9.35 mil and RM9.8 mil, translating into EPS of 8.3 sen and 8.7 sen respectively. Compared to FY2013 and FY2014, this coming July quarter result will be boosted by the following :- (a) Weakening of Ringgit In FY2013 and FY2014, Ringgit / USD was 3.13 and 3.27. In July 2015 quarter, the exchange rate was easily 3.65. (b) Turning Around of Malaysian operation In July quarter of FY2013 and FY2014, Malaysia operation generated PBT of RM0.3 mil and RM1.5 mil respectively. With revamping of its operation, Malaysia division nowadays generates PBT of RM2 to RM4 mil easily. However, tax rate could be higher. In latest quarter ended April 2015, tax rate was 17% instead of zero. Taking all these into consideration, it is not inconceivable that Poh Huat's coming July quarter EPS could be closed to 10 sen. With share price at RM2.19, that kind of EPS should get many people excited and trigger a re-rating. Bountiful harvest is near. Enjoy the fruits of your investment.  (Icon8888) Poh Huat (Part 5) - Target Price of RM3.50According To Conspiracy Theory ?Author: Icon8888 | Publish date: Mon, 27 Jul 2015, 03:21 PM1. Conspiracy Theory According to CIMB's analyst report dated 22 July 2015 for Hevea, a lot of funds cannot buy stocks with daily trading volume lower than RM1 mil (RM3.8 mil). This could be one of the reason why recently some public listed companies, backed by strong earnings, decided to undertake bonus issue and / or share split. Far from a superficial exercise, this should lead to higher trading volume and put them in Fund Managers' radar.  Before the share split, Hevea has trading volume of approximately 0.8 mil shares. Based on share price of let's say, RM3.70, daily trading volume will be 0.8 m shares x RM3.7 = RM2.96 mil, less than RM3.8 mil. However, after split, trading volume reached 8.72 mil shares in the first trading day. Based on RM1.00 then, trading volume was RM8.72 mil, above the RM3.8 mil threshold. In addition, according to CIMB, a lot of funds also cannot buy stock with market cap less than USD100 mil (RM380 mil). Hevea has 100 mil shares before split. If they target to attract funds, share price has to be at least RM3.80. On 20 July 2015, one day before the share split went ex, Hevea closed at RM3.79 !!!! Was that just a coincidence or due to support by invisible hands ? I think only those people behind it have the answer. It seemed that the tricks worked. With RM380 mil market cap, the moment the stock went ex the next day, there was aggressive buying, pushing share price from RM0.95 to RM1.05. Since then, share price sustained at around RM1.10, equals to RM4.40 before split. Funds buying ? As usual, I don't have the answer.  (Coincidence or conspiracy ?) 2. Poh Huat 's Rising Share Price Recently, Poh Huat share price has performed very well, rising from RM2.18 on 10 July to RM2.80 on 27 July, a gain of 28% over 2 weeks. This has sent tongues wagging on whether a bonus issue or share split is imminent.  With the Hevea conspiracy in mind, I decided to do a quick check on how things will pan out if the same plot is applied to Poh Huat. Based on Poh Huat's 107 mil shares, share price of RM3.50 will result in RM380 mil market cap. How will Poh Huat look like at RM3.50 ? During the financial year ended October 2014, Poh Huat reported net profit of RM23.8 mil. However, as pointed out in my past articles, their July 2014 quarter was adversely affected by riot in Vietnam. Based on rough estimate, without that distorting effect, net profit could be approximately RM28.5 mil. That was when USD / RM exchange rate was about RM3.20. The exchange rate now is RM3.80. It is not inconceivable that Poh Huat can deliver RM35 mil net profit in the latest financial year, boosted by strong US dollar as well as better economic performance of Uncle Sam, its major customer. At RM3.50, PER will be a comfortable 10 times. 3. Concluding Remarks (a) First of all, I declare that I am a shareholder of Poh Huat. So I will be positively biased as far as its prospects is concerned. Please take whatever I said with a pinch of salt. (b) I don't expect anybody to be so reckless / silly to rush in to buy Poh Huat at this price so as to benefit from "further upside" at RM3.50. Afterall, it is just a conspiracy theory. (c) I wrote the article mostly for fun. At the end of the day, I expect share price to be driven by earnings and dividend, instead of corporate exercise like bonus issue / share split. Maybe Poh Huat will go RM3.50, maybe it won't. Please don't blame me if things don't work out as expected. | 4.5 | 0.1 | 1.2 | 9.9 | 5.9 | 2.4 | 3.6 | 10.4 | 7.7 |
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