Monday, November 23, 2009
Why I Like Kim Hin (A Lot)
Another one which is part of the recovery story. This is is even better that the couple that I have featured recently. Kim Hin had a troublesome spot a few years back but has "revamped its thinking and strategy" to be a an out-and-out transparent, diligent and professional company. The first couple of years, not many believe that the tiger has changed its stripes. I have been monitoring the company, on and off, and I must say, I am giving it near full marks. They did not simply play their shares anymore like before. I mean, look at the 52 week high-low, its just 84 sen and 1.15.
Its been moving this morning and I am already typing as fast as I could. Please do not think that I am whacking the shares before posting. Kim Hin Industry is an investment holding company engaged in manufacturing and distribution of ceramic floor, homogeneous and monoporosa tiles. The company through its subsidiaries is involved activities that include trading of building materials, property letting, property and investment holding; and wholesale and retail of ceramic tiles. Kim Hin primarily operates in Malaysia, China and Australia. It is headquartered in Sarawak. The company recorded revenues of MYR251.5 million in the fiscal year ended December 2008. Its net profit was MYR4.2 million in fiscal 2008. Thats fine and dandy because it was the difficult 2008. To even come out in the positive is an achievement to cost control and product acceptance.
Basically, there is only one big catalyst:
For the 2Q ended June 2009, its revenue was RM63m and net profit was RM9.48m (note that the whole of 2008 its net profit was just RM4.2m. The !Q2009 was still difficult for them, the carry on effects of the financial crisis, which saw only a net profit of RM1.37m.
Those who monitor quarterly results (they should, especially when you are looking for srong recovery stocks) will note that they released their 3Q2009 figures on 18 Nov. It was outstanding. Revenue was RM65.3m and net profit was RM11.9m!!! If you take in the first 9 months of 2009, its total net profit came to RM19.82m or a net EPS of 13.77 sen. If you assume they make a similar sum for 4Q 2009, basically you can add another 6 sen to the figure, making it a net EPS of 20.77 sen.
Now 20.77 sen is very significant for a stock that trades below RM1.30. A PER of around 6x. Its net asset per share is RM3.08. Its got RM87.2m cash in bank, and about RM40m in liabilities. All that will become very significant when you consider they only have 154.9m shares. That translates into:
Net cash per share of 30 sen
Net tangible asset of RM3.08
Share price below RM1.30
Net EPS (likely) for 2009 of 20 sen
In a recovery, this stock should see a similar surge in business over the next 2 years at least. The stock and figures sell by itself.
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