Today, we feature a note on Lee Swee Kiat Group Berhad in our FundTech Radar – 3rd Apr 2018. The company is principally engaged in manufacturing trading and distribution of mattresses, bedding accessories, laminated foam, polyurethane foam, natural latex foam and other related products. In 4QFY17, LEESK’s exports constituted approximately 55% of its total revenue.
· Strong 3-year (FYE15-17) revenue and PATAMI CAGR of 0.8% and 17.9% respectively
· However, FY17 PATAMI margin dropped to 8.6% (vs. 10.3% in FY16).
· Net cash position of RM8.2m (5 sen per share) as at 31 Dec 2017.
· Dividend yield of 2.3% in FY17 with 38.1% div. payout. LEESK has decided to fix a dividend payout policy of at least 30% of net profit.
· The new expansion and modernization project for the latex division would increase capacity by 50%.
· May introduce more automation in its manufacturing process.
· Rising cost of centrifuged latex, foreign currency risk on sales denominated in USD as well as shortage of workforce will be the key factors affecting LEESK’s performance.
· In talks with Alibaba and its peers, over its plan to explore e-commerce opportunities.
· Currently trading at a 12-month trailing P/E of 17.4x (16.1x if excludes 5 sen net cash per share), a 15% discount compared to its closest peer (FACB Industries), which is trading at a 12M trailing P/E of 20.6x.
The long-term uptrend is still valid
The above information is extracted from CIMB Research Report. For the full research reports, outlook and disclaimers, please logon to your account on www.itradecimb.com.my and click on <Research> Tab under Malaysia.
This FundTech Radar report is intended for educational purposes only. It represents a preliminary assessment of the subject company, and does not represent initiation into CIMB's coverage universe. It does not carry investment ratings and CIMB does not commit to regular updates on an ongoing basis.
3rd Apr 2018
Disclaimers: This distribution is by CIMB Investment Bank Berhad (“CIMB”) in Malaysia only. The views are our own as of this date and subject to change. No further distribution is allowed without our prior written consent. CIMB, its related corporations, affiliates and business partners make no recommendation, offer or invitation to transact in any securities, futures contracts or other instruments. Please make your independent evaluation, consider your own investment objectives and financial situation and consult your own professional advisers before participating in any transaction.