Quarter report released date:
A very detail analysis from Riche Ho
A summary from his research
Business
- Mainly involved in the manufacturing and sale of wooden furniture and components particularly rubber-wood furniture for both the domestic and export markets
- About 60% of its raw materials were rubber-wood-based with the remaining being oak, pine wood and other wood-based materials.
- owned three factories in Malaysia, two factories in Vietnam and one factory in Thailand.
- The United States region was LATITUD’s core market all the while, accounted approximately 93% of the Group’s FY16 revenue.
Financial Performance
- financial result had been improving 5 years consecutively since FY12
- LATITUD’s operation was seasonal in nature whereby the revenue for the Jan to Mar (Q3) was slightly lower due to long festive holidays and also lower demand in the United States which normally slowed down after Christmas and New Year.
- commonly in the range of 16-18% over the past two years. 1% changes in gross margin would affect LATITUD’s profit by MYR1.5-2.0m.
Market involve
- The United States region was LATITUD’s core market all the while, accounted approximately 93% of the Group’s FY16 revenue.
Expansion plan
- LATITUD was in the pipe line to install a new high-end production line and design center, to cater for production of small quantity high value products.
- It would enhance the design and development of new products and expedite the delivery of new product prototype at Vietnam plants
- Once the installation of the production line completed, it was expected to further improve LATITUD’s profitability in years to come.
- Other than that, in order to reduce reliance of low-skilled labor and to improve production efficiency, LATITUD had allocated MYR24m to upgrade or automate existing production lines with advanced automation and state-of-the art technology machinery
US new home sales
Mortgage application rate
Share price
- Current share price:RM5.63
- Support level: RM5.32/ RM4.82
Conclusion
- Let’s assume LATITUD will be able to deliver MYR80m profit in FY17. Based on its outstanding shares of 97.2m, its earnings per share will be 82.3 cent. With an estimated PE of 8-10, LATITUD will have an intrinsic value of MYR6.60-8.23.
The below was the comparison of its peer’s PE:
LIIHEN – 8.0
LATITUD – 8.3
POHUAT – 8.8
SYF – 10.1
HOMERIZ – 10.8
Let's assume that Riche Ho assumption is correct, Latitud will make RM80mn in FY17
that mean it leave RM26.910mn to fit in
According to past result, it is an easy job for latitud
Shareholding Changes
Reference:
http://klse.i3investor.com/blogs/rhinvest/116161.jsp
http://www.tradingeconomics.com/united-states/new-home-sales
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