Saturday, November 22, 2014

About Farlim ... Erratic Earnings.

It appears to be a good candidate for a privatization exercise based on prevailing valuations.

The company is involved in property development. It also does marketing and distribution of building materials. It has completed various residential and commercial properties in Kajang, KL and Penang and is currently (Nov 2014) developing the Bandar Baru Ayer Itam township.

It has not been very aggressive in undertaking new projects. Property development cost had been flattish between rm17 million and rm20 million in the past four years. Meanwhile, revenue has more than halved half since 2010, totaling a mere rm22 million in 2013.

Its profitability has declined from rm4.7 million in 2010 to a net loss of rm4.7 million in 2012 which widened further to rm11.5 million in 2013.

Profits in 1QFy2014 surged to rm46.6 million due to the one off gain on land disposal of rm54.9 million. It fell back into the red in 2QFy2014, with a loss of rm603000 before turning a net profit of rm1.7 million in 3QFy2014. Outlook is uncertain given its erratic earnings record.

Its book value stood at rm1.08 per share. Its assets understated as it holds land bought at low prices. The company has 208 acres of land in Terengannu with a book cost of rm1.6 million or 17.7 sen psf and 2.23 acres in Penang carried at rm4.2 million or rm43.3 psf. Both plots have not been revalued since 1998.

Farlim Holding Sdn Bhd owns a 43.2% stake. To privatize the company would only cost an additional rm43 million.

No comments:

Blog Archive


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.