Monday, December 15, 2014

Latitude ... Beneficiary Of Weak Ringgit

With the US market contributing approximately 93% of its revenue in its financial year eneded 30 2014, the weakening of the ringgit is a boon for the company as it stands to book in higher foreign exchange gains.

Every 1% increase in the USD against the ringgit translates into an additiional rm150000 of its turnover and rm15000 to its profits before tax.

It is also expecting the strongger USD to boost its profit in 2015. Aslo with high demand from the USD now (Dec 2014), it is looking forward to that as a deiver for its sales.

With the company’s products cater for the middle to middle high income households. With the US seeing a resurgence in home purchases, expects demand for the group’s wooden furniture to be well supported.

Latitude Tree has been a beneficairy of a weaker ringgit since the currency began to descend from a high of 2.9625 against the USD on May 8 2013. In FY2014, the company’s net profit rose 126% to rm55 million or 56.6 sen per share while revenue grew 32% to rm652 million.

In FY2013 Latitude posted a net profit of rm24.37 million or 25 sen per share. This was nearly triple the rm9.84 million profit it made in FY2012, the year it was hit by economic woes in the US.

Latitude is currently (Dec 2014) trading at 5.3 times its annualised EPS. Based on FY2014’s EPS of 56.6 sen, it is trading at a historical PER of 6.38 times. Its peers namely SYF Res (10.57 times), Poh Huat (8.3 times) and SWS Capital (40 times).

Its debts has also decrease which will result in lower interest charges. As at 1QFY10`5, its total borrowings were 6.45% lower year on year at rm81.13 million. Its finance cost of rm684000 in the quarter was also 30.28% lower than the previous year.

As at Sept 30 2014 the company had net cash of rm50 million equivalent to rm0.52 per share.

It has a free float of 53.16% as at Oct 31 2014.

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Please note that all data given are merely blogger's opinion. It is strongly recommended that you do your own analysis and research before investing.