Hevea: Weighed down by USD loan, earning still managed to grow

Results Update

For QE30/9/2015, Hevea's net profit increased by 17% q-o-q or 216% y-o-y to RM18 million while revenue grew by 11% q-o-q or 29% y-o-y to RM124 million.

Revenue increased y-o-y due to increased revenue from the particleboard sector (as a result of higher volume and higher average selling price from sales of higher grade, value added products and strengthening of USD) and the RTA manufacturing sector (due to higher productivity, efficiency and also the capability to produce higher value and wider range of products).

Profit before taxation increased y-o-y due mainly to better performance in the particleboard & RTA manufacturing sectors despite being impacted  by  unrealized  exchange loss of  RM10.23  million due to the translation of the USD denominated term loan.


Table: Hevea's last 8 quarterly results


Chart 1: Hevea's last 32 quarterly results

Valuation

Hevea (closed at RM1.39 yesterday) is now trading at a PE of 9.7 times (based on last 4 quarters' EPS of 14.3 sen. At this PER, Hevea is still deemed fairly attractive. It may command a PER of 12 times.

Technical Outlook

Hevea has been on a strong uptrend since it broke above its long-term downtrend line, RR at RM0.23 in November 2013. The 30-month EMA line may serve as its uptrend line, with support at RM1.10.


 Chart 2: Hevea's monthly chart as at Nov 17, 2015  (Source: ShareInvestor)


 Chart 2: Hevea's weekly chart as at Nov 17, 2015  (Source: ShareInvestor)

Conclusion

Based on good financial performance, relatively attractive valuation & positive technical outlook, Hevea remains a good stock for long-term investment.

Note:
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, Hevea.