HEIM: Earnings Soared

Results Update

In QE30/9/2019, HEIM's net profit increased by 31% q-o-q or 57% y-o-y to RM103 million while turnover rose 18% q-o-q and y-o-y to RM602 million. Revenue grew by 18% y-o-y, mainly driven by improved sales performance across all core brands and new product launches. Excluding the Sales and Services Tax (“SST”) impact, the Group revenue grew by 11%. Group profit before tax (“PBT”) rose 39% on the back of revenue growth and improved cost efficiency as well as the timing of commercial spend for new product launches executed in Q3.


Table: HEIM's last 8 quarterly results

 
Graph: HEIM's last 56 quarterly results

Financial Position

As at 30/9/2019, Heim's financial position is deemed adequate with current ratio at 0.94 time while gearing ratio was at 2.06 times. Under a less-than capable management, I would rate these ratios should be a concern. However, Heim -like Nestle - is a well-managed MNC which capital management is carried out to maximize return to shareholders. Thus, its capital structure & working capital management is performed to an "extreme" to weed out unnecessary fat.

Valuation

HEIM (closed at RM25.90 yesterday) is now trading at a trailing PER of 24.3 times (based on last 4 quarters' EPS of 106.52 sen). Its dividend yield is decent at 3.7%. Based on PER and DY, HEIM is deemed fairly attractive.

Technical Outlook

HEIM is in an long-term uptrend line. Its immediate support comes from the horizontal line at RM25.00.


Chart: HEIM's weekly chart as at Nov 28, 2019 (Source: MalaysiaStock.Biz) 


Conclusion

Based on good financial performance, fairly attractive valuation & positive technical outlook, HEIM is a good stock for your investment portfolio.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.