Latitud- A slightly disappointing Quarter (Q4FY14) (Updated 1)

Latitud closed at RM3.33 on 29th August 2014 Before Merdeka Day

SUMMARY OF KEY FINANCIAL INFORMATION                                                                      30/06/2014

			INDIVIDUAL PERIOD		CUMULATIVE PERIOD
			CURRENT YEAR QUARTER	PRECEDING YEAR CORRESPONDING QUARTER	CURRENT YEAR TO DATE	PRECEDING YEAR CORRESPONDING PERIOD
			30/06/2014	30/06/2013	30/06/2014	30/06/2013
			$$'000	$$'000	$$'000	$$'000
1		Revenue	142,759	124,417	651,025	493,687
2		Profit/(loss) before tax	10,283	9,352	71,867	35,658
3		Profit/(loss) for the period	8,631	8,230	64,333	32,046
4		Profit/(loss) attributable to ordinary equity holders of the parent	8,681	5,949	55,008	24,366
5		Basic earnings/(loss) per share (Subunit)	8.93	6.12	56.59	25.07
6		Proposed/Declared dividend per share (Subunit)	0.00	0.00	0.00	0.00
			AS AT END OF CURRENT QUARTER		AS AT PRECEDING FINANCIAL YEAR END
7		Net assets per share attributable to ordinary equity holders of the parent ($$)	3.1700		2.3900
	SUMMARY OF KEY FINANCIAL INFORMATION 31/03/2014

		INDIVIDUAL PERIOD		CUMULATIVE PERIOD
		CURRENT YEAR QUARTER	PRECEDING YEAR CORRESPONDING QUARTER	CURRENT YEAR TO DATE	PRECEDING YEAR CORRESPONDING PERIOD
		31/03/2014	31/03/2013	31/03/2014	31/03/2013
		$$'000	$$'000	$$'000	$$'000
1	Revenue	146,773	107,218	508,266	369,270
2	Profit/(loss) before tax	14,809	5,822	61,584	26,306
3	Profit/(loss) for the period	13,573	5,769	55,702	23,816
4	Profit/(loss) attributable to ordinary equity holders of the parent	12,752	4,304	46,327	18,417
5	Basic earnings/(loss) per share (Subunit)	13.12	4.43	47.66	18.95
6	Proposed/Declared dividend per share (Subunit)	0.00	0.00	0.00	0.00
		AS AT END OF CURRENT QUARTER		AS AT PRECEDING FINANCIAL YEAR END
7	Net assets per share attributable to ordinary equity holders of the parent ($$)	3.0500		2.3900

Source: Bursa Malaysia

Latitud Q4 FY14 result was just released on 28^th August 2014. Latitude's FY14Q4 revenue (RM142.7m) has dropped 2.7% if compared to FY14Q3 revenue (RM146.8m) while the EPS for FY14Q4 (8.93cents) (which is below my expectation of at least 10 cents) has dropped 32% if compared to EPS for FY14Q3 (13.12 cents).The main reason for this drop is due to the loss of one week productions in its Vietnam factories as a consequence of the recent Vietnam riot, together with delay in goods delivery. However, both revenues and net profit if we compare qoq and yoy, it improves by 14.7% and 45.9% respectively. Besides, its NTA has improved by 3.9% from RM3.05 to now RM3.17. So any price below RM3.17 is still a good buy for time being.

The EPS for whole FY14 is 56.6 cents, with closing price on 29^th August 2014 RM3.33, Latitude is trading at a PE of 5.88x.If we give Latitude of conservative PE of at least 7, then its target price should be  RM3.96 and above.

On 29^th August 2014 (after the result day), Latitud has gapped down from previous closing price on 28^th August 2014 (RM3.60) to RM3.46 and eventually closed at RM3.33 with a high trading volume of 16.9k.The gap down was mainly to the poorer than expected quarter result due to recent Vietnam riot and also ‘recent excessive surge or profit taking before result out’as predicted in my previous post:

http://commoncents2011.blogspot.com/2014/08/latitud-moving-to-greater-altitude.html

As long as Latitud is above her long term uptrend support line MA200, her bullish trend still remain intact.

In addition to this, I will expect there is a slight pull back or correction in this 1 to 2 months time before the next wave of rally.There will not be any big move for Latitud unless there is a sudden breaking news/announcements.

The main catalysts/themes for Latitud next surges:

1) Continuos and Increasing demand of furniture from US as a result of US economic recovery, home sales and increasing consumer spending sentiment, strengthening of US dollars which facilitates the export of furniture and etc.

2) Possible proposed of 1:2 bonus issues due to its abundant reserves as a reward for the shareholders

3) Special dividend or higher final dividend pay out ratio?

Historically, Latitude will only pay dividend once a year during December. As according to FY13, the company paid out 25% from its net profit as final dividend to reward its shareholders. Conservatively, if I assume that its company still maintains its current dividend pay out ratio of 25%  this means that it might pay 14.15 cents (56.6 cents x 25%) for FY14. If we calculate it in dividend yield, that will be 4.25% yield based on its closing price at RM3.33 on 29^th August 2014. In view of its abundant capital reserves and increasing net profit , the final dividend  of >25% pay out or special dividend is very likely.

4) Full contributions from Vietnam operations or factories will only be seen in FY15.

          The possible risks to be weighed:

      1)  Latitude is a cyclical stock-which depends  very much on US   

          economy. A hiccup in US economy will have a great impact on   

          its share price.

      2)  Vietnam issues

      The purpose of this blog is to share knowledge, news and personal opinion on investment, economy, stock market etc. There is no guarantee that all the information in this blog is accurate and up-to-date. Invest at your own risk! Happy Merdeka Day in advance!TQ.