Thursday, June 19, 2014

LBAlum ... Lowest PER Versus Its Peers ...

Semenyih-based LB Aluminium Bhd is looking to undertake another major expansion exercise in 2014, in line with the growing aluminium extrusion industry in Malaysia.

It is currently (May 2014) in the midst of preparing the budget for the expansion. However, details of its expansion will only be finalised by the end of July 2014. Three years ago (2011), the company underwent a major expansion of capacity, which cost about RM40mil.

The company’s expansion will either be by way of capacity, new products, and or, new markets. It has no plans to go into the upstream side of the industry.

Any expansion will be internally funded. LB Aluminium’s 2013 net debt to earnings before interest, tax, depreciation, and amortisation ratio stands at 1.46.

It is primarily cater for the building and construction industry. Most builders are moving towards green index buildings. Typically a green building would use more for aluminium, which works out as a bonus for LB Aluminium.

The company also caters to other industries such as electrical and electronic, transportation, engineering, solar, household tools, and furniture among others.

It also serves as a one-stop solution centre for its clients, in providing value-added services such as cutting, degreasing, hole punching, stamping, and tapping among others.

The company currently holds 25% of the market share in Malaysia. While it predominantly caters to the domestic market, it exports some 30% of its products to the UK, Australia, North America, South-East Asia and Japan.

It will diversify its customers rather than regions it supplies to.

It currently (end May 2014) trades at around 7.6 times its historical earnings, compared with its peers like Press Metal Bhd and Tong Herr Resources Bhd, which trade at 100 times and 13.3 times respectively.

Its net asset value is more than RM1.

In the third quarter of 2014, the company saw slight decline in net profit and revenue to RM4.88mil and RM96.62mil respectively on the back of lower business volume following the festivities during the quarter.

LB Aluminium is position where it can afford to pay more dividends

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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.