Monday, August 24, 2015

FLBHD: An Attractive Timber Stock


Focus Lumber Berhad ('FLBHD') is involved in the manufacture & sales of plywood, veneer, and laminated veneer lumber products. Its factory is located in Keningau, Sabah.

Recent Yearly Results

FLBHD's revenue has been on an uptrend since FY2009. Its profits are erratic- dropping in FY2009 & FY20112 and recovering the following year..

Chart 1: FLBHD's last 6 yearly results

Recent Quarterly Results

From the table & chart below, we can see that revenue & profits have been relatively stable in the past 10 quarters. In QE30/6/2015, revenue increased 67% q-o-q due to higher sales volume. PBT increased q-o-q due higher sales volume, higher average selling price (due to strengthening of US dollar higher recovery rate) and lower production cost per cubic metre.

Table: FLBHD's last 10 quarterly results

Chart 2: FLBHD's last 10 quarterly results

Financial Position

FLBDB's financial position is deemed satisfactory as at 30/6/2015. Its current ratio stood at 15 times (!) while gearing 0.1 time (!). It is a very cash-rich company, with cash in hand of RM85 million. Divided by the number of shares outstanding of 103.2 million, the stock has a cash backing of RM0.82 per share.


FLBHD (closed at RM1.51 last Friday) is now trading at a PER of 7.9 times (based on last 4 quarters' EPS of 19 sen). If the cash backing is deducted from the share price, then the PER would be 3.6 times only. That makes the stock very attractive.

The company has been paying dividend of 6 sen in FY2011 & FY2012 and 8 sen in FY2013 & FY2014. The past payouts have been one-time payment either in December of the same year or January the following year. This year, FLBHD has announced a smaller dividend of 5 sen, earlier than usual and payout was in August. This break in the pattern may suggest that FLBHD may be 2 dividend payouts going forward. The 2nd & final dividend should equal the 1st dividend payout of 5 sen. If so, FLBHD's dividend yield could be a fairly attractive 6.6%.

Techncial Outlook

FLBHD's uptrend is checked by an inverted Head-and-Shoulder formation, with neckline at RM1.70-1.75. An upside breakout of this neckline would render the formation into a continuation pattern. A sharp pullback below the Right Shoulder, say RM1.25, would render this a bearish reversal pattern.

Chart 3: FLBHD's monthly chart as at Aug 21, 2015 (Source:


Based on good financial performance & position, attractive valuation & mildly positive technical outlook, FLBHD is a good stock for long-term investment.

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, FLBHD.

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