HHGroup

The group which converts oil palm EFB into biomass materials and coconut husk into longfibres for industrial use, sees opportunities in moving further downstream to improve its margins.

The group which manufactures mattresses made with long fibres targets to commercialize a new geotextile product – palm fibre mat – by end 2014.

It plans to set up a subsidiary in China by 1QFy2015.

The group exports to China comprising EFB fibre. In FY2013, exports to China accounted for 55.2% of the group’s revenue of rm73.7 million

However a risk Heng Huat faces is its dependence on major customers. One of its clients, Shenzhen Yuemao, contributed about 30.14% to group revenue in FY2013.

It is allocating the bulk of the gross proceeds, rm9.38 million to the repayment of bank borrowings, rm4.55 million to working capital, rm4 million to capex and rm3 million to defraying of listing expenses.

The group envisages a dividend payout ratio of up to 20% of its net profit to its shareholders in each financial year.

At rm0.47 per share, it is trading at a trailing 12 month PER of 11.09 times or 1.24 times book value