Fiamma Holdings Berhad engages in the distribution, sale, and service of electrical home appliances, sanitary ware, and bathroom accessories in Malaysia.
It also distributes pre-fabricated kitchen cabinets; water filtration systems; and medical devices and healthcare products.
In addition, the company provides warehousing and logistics services. Further, it involves in property investment, development, and management activities.
The company was founded in 1979 and is headquartered in Kuala Lumpur, Malaysia.
Fundamental Analysis.
1. Its Earnings
Unadjusted ('000 mil, sen)
2008 = 15.3, 20.45
2009 = 14.5, 13.11 (with Rights issues and warrants)
2010 = 20.4, 17.4
2011 = 27.7, 23.6
2012 = 26.9, 21.6
2013 = @ 1H = RM 15.2mil, 11.7 sen EPS is up 26%. Sales up 19%.
Comment:
Look at its net profit in 2008-2009, which was the year of severe pessimism for consumer products. But Fiamma registered quite a commendable profit.
FIAMMA operated 3 segments of business, Investment Holdings and Property Investment, Property Development and Trading & Services. Out of these 3, in the latest
report, Investment and Trading & Services contributed the almost entirely. As for its Trading & Services segment, it needs to strengthen the distribution network, build up on branding.
Capex is low because FIAMMA is a distributor, not manufacturer.
2. Its Cash & Operating Cash.
Its operating cash also healthy. For 1H, it posted RM 29.9mil operating cash. Its Cash balance is RM 63.7mil, up RM 24.6mil from RM 39.0mil.
For the last 5 years, Its cash has been growing from RM 12.3mil in 2008 to RM 63.7mil as per latest quarter. Up 417.9%, YES triple digit!
3. Dividend
Its dividend payment has doubled.
Record are as per below;
Year: (sen)
2008: 3
2009: 4
2010: 5.5
2011: 7
2012: 7
For FY13, it has declared 3 sen dividend, X-date 12-Jun, to be paid 28-Jun-2013.
payout Ratio is about 1/3, 33%.
Yield is about 5%.
4. DEBT
Its borrowings reduced, from RM 44.7mil to RM 36.1mil now. Reduce about 18%.
Now, it's a little worrying as the DEBT is all current, means payable within 12 mths. However, considering its cash holding is RM 63 mil and its total current assets is RM 248.2 mil, I supposed this DEBT is manageble.
Conclusion
Valuation:
@ RM 1.39, with earning of 23.5sen (ttm),
Mr market price it at 5.91x PE. Let say due to current market condition (super bull almost due for correction), I aim it at 10x PE, since most companies traded at double-digit PE now.
Its share price has an upside potential of 69% to a target price of RM 2.35. (Technicals may put a cap on its price at RM 2)
ROE is at OK level of 11.08%. (I would normally choose companies that would grow its shareholders fund at > 15% annually)
No broker is following this company. Perhaps it is a boring business, but its earnings is stable.
Now, I am more interested in its warrant. Its warrant is now traded at DISCOUNT of 13.6% :). Exercise price RM1, expiry date Nov-2016.
Let say its mother reach RM 2, it -WA last closing is 20 sen, that means it should be priced at RM 1, that is 5x of its warrant now.
Good Luck and Happy Trading.
Technical Analysis. (chart not provided)
I suppose RM 2 is reachable and that could be the resistance.
Price may re-visit RM 1.20-1.25 as a weak support.
Volume has picked up recently.
No comments:
Post a Comment