FIGURE 1: HARN LEN CORP BHD
LAST 2 YEARS SHARE PRICE TREND
**analysis
based on 2018 annual report.
1.
GENERAL INTRO: HARN LEN is one of the main oil
palm plantations in Malaysia.
2.
NOTABLE POINTS:
a. In
2018 report, main business segments include operation of oil palm plantations
and milling operations as well as hotel operation (Tropical Inn, Johor).
b. The
Group operates oil palm estates in Pahang and Sarawak with a total planted area
of 17,083 hectares and total annual fresh fruit bunches (FFB) production of
180,023 MT.
c. The
group also operates palm oil mill that produced 66,615 MT CPO in 2018. The
reported average oil extraction rates (OER) is 20.69%.
d. For
the financial year 2018, the Group reported a pre-tax loss of RM19.7 million
due to lower contribution from the Plantation division. The downtrend was exacerbated
by sustained depressed and sluggish commodity prices of Crude Palm Oil (“CPO”)
and Palm Kernel (“PK”), and finance costs resulting from borrowings to meet
obligations and commitments of the Group.
e. In
terms of hotel operations, the Group's owned hotel (Tropical Inn) has been
facing stiff competition from other providers in the market (such as boutique
hotels and Airbnb facilities). While its average room rates has been increasing
slowly (currently at RM83), its average occupancy rate has been decreasing over
the years (currently 42%). Owing to recurring losses, the Group has ceased
operating the Hotel division at the end of Quarter 1, 2019 and has placed out
invitations for interested hotel operators to lease the property.
3.
IS THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE
RANGE (RM million): 185.7 million as reported in 2018 annual report, this is a low
revenue company.
b. SHARE
PRICE: from 2018-2020, share price ranged between around RM0.50 to RM0.60.
c. EARNING
PER SHARE (EPS): earning per share in last 5 years fluctuated from -12.22 to 3.43
sen
d. FUTURE
POTENTIAL/PROSPECTS: share price expect to be stable in the next few years
e. CAPITAL
EXPENDITURE (CAPEX): spending on purchase of new fixed assets is RM 31.5
million, around 5% of total assets.
4.
IS THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND
YIELD: in 2018 financial year, HARN LEN did not declared a dividend payout to
shareholders.
b. CONSISTENCY:
the dividend payout was not consistent, dividend paid to shareholders in last
five years (2014-2018) ranged from 0 to 8 sen per share.
c. DIVIDEND
PAYOUT RATIO: N/A
5.
IS THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN
ON EQUITY (ROE): in 2018 financial year, HARN LEN reported a low return of
shareholders’ equity, at -7.87%. Last five years ROE ranged from -7.87 to 1.93%.
b. COST-TO-INCOME
RATIO: N/A
6.
OTHER INDICATORS:
a. CASH
FLOW: cash flow is positive but very low, around RM 1.06 million, equivalent to
RM 0.01 per share
b.
SUPPORT BY INSTITUTIONAL INVESTORS: this counter
is not well supported by institutional investors, there are only 9 institutional
investors at top 30 major shareholders list, not including insurance companies and
investment funds. Its major shareholders are LNH Enterprise Sdn Bhd (28.37%)
and Low Nam Hui United Holdings Sdn Bhd (20.06%).
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