Tuesday, November 4, 2014

Latitude - a hidden GEM

Latitude: It is one Malaysia’s largest more profitable and attractively priced furniture player. Despite the industry volatile, the company has been consistently profitable since its listing in 2001 and as a result built up a large cash pile.

It manufactures rubber wood furniture with three manufacturing plants in Malaysia, two in Vietnam and one in Thailand. The company exports over 99% of its products, with the US taking over 90% of its sales. With a strong US housing recovery, prospects for Latitude are looking even more positive while the strengthening of the USD against the ringgit will boost revenues.

For FY June 2014 sales surged 32% to rm651 million while pre tax profit doubled to rm72 million. Its cash stood at rm42.6 million or 44 sen per share at end June 2014.

It is currently (30 Oct 2014) trading at a 12 month trailing PER of 6.4 times and a price to book ratio of 1.1 times.

Its sales are mostly on cash terms and as a result, the company has very low receivables. Inventories turnover was at a respectable 5.9 times in 2014.

It is focusing on expanding its profitable Vietnam operations while scaling down its loss making Malaysian production. The company has 100 acres of land in Vietnam, purchased at USD25 per sq m in 2001. Today the land is selling at over USD100 per sq m.

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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.