Wednesday, December 30, 2015

HHGroup Quarter Report Analysis 30.09.2015 (WARNING!!)

HHG Quarter Report Analysis 30.09.2015 (WARNING!!)

Part 1

Part 2

Looking for the latest quarter, Sept 2015. The quarter revenue was dropped from RM26 million to RM18 million, which is a huge drop if compare to last past few quarters.
Besides this, please be remind that this quarter have a one off gain of RM2.4 million. If without this profit, the company is only making merely RM0.4 million, which mean there is huge 90% drop in profit in this quarter.
The management mentioned in their lastest quarter report that this is due to uncertainty of China's operation environment and mitigate the credit risk exposure by lowering the sales. This statement can be supported by increasing of "Trade and Receivables" in the above picture (Part 2).

This will put HHG in a risk that money is not able to collect back and turn into bad debt, which subsequently affect the cash flow of the company.

Now we look at the debt and cash level of the money. 
Short Terms Borrowing RM16 million
Long Terms Borrowing RM10 million
Cash on Hand RM8 million

Financial Cost around RM 1.6 million per year.

Base on current share price RM0.62, which translate to PE 13 to PE14

The PE looks quiet high for a small company like this. It is very risky to buy this stock at the moment as the chance of lost of money greater than making money.

Lastly, the ROE of this company is less than 5%.

Buy at your own risk!

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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.