Tuesday, April 6, 2010

Another Gem Stock - ?????

Ta ta !!! The stock that i mentioned/spotted last month is ...... yes FAVCO !!!
But too bad only managed to grab a small some, not being able to accumulate more. :(
Today this counter has appreciated 25% ever since i first bought, since there isn't much chance for me to buy more, i decide to blog it up here now.

Look at the earning of FAVCO, strengthening every year. Revenue increase every year and go in tandem with profit, EPS and NA. In fact a Marvelous growth.



The Company's subsidiaries include Favelle Favco Cranes (M) Sdn. Bhd., which is engaged in designing, manufacturing, supply , servicing, trading and renting of cranes; Favelle Favco Cranes Pte.

As of today, the EPS has come to 16.2sen (Please refer to latest earning of FAVCO). Would expect a better earning this year as well. FAVCO has so far registered an annual revenue growth of about 25%, assuming this translate to a mere 15% profit that will represent approximately 32millions net profit, which mean, the EPS will further increase to 19sen. For such a growth rate, simple calculation of fair value is 5.5 X 19 = RM1.04.

Furthermore, there is a pending 4sen dividend to be declared sometime end May, that represent a total of 4% DY basing on current price at RM0.945.

When we buy stock, we are buying into future. When we can assure future earnings then we are more or less safeguard over investment.
DY of 4%, steady EPS and low PE, an undervalue stock that fit in my searching criterias. A buy call from me but trade with your own risk.


7 comments:

Anonymous said...

Why not blog it when you think the right time to buy instead of when you making profit.

Please share good counter with everyone.

horse said...

1-million,

I was 1st thought accumulate enough first before i share out but too bad it come too fast for me to do anything. Just mentioned without blogging it out. ANyway it is history.

Just sold FAVCO at 1.03. :)
Hopefully is not too early as it is 36% profit for me. :)

Anonymous said...

horse
Congratulation, you have done a great job for being spot such as explosive counter, it is very similar to your last pick on Kfima. Well done!

With such a impressive profit of 36%, you are already ahead of your ROI: Laughing all the way to bank lo :)

Anonymous said...

Finally, PIE has propose dividend total of 35sen; yield of 8.2% based on today closing price :)

ccdev said...

I used to follow this company because connected to muhibah, at that time a 'hot' counter. Looking at the numbers of increasing sales and eps, this company looks good but i am slightly uncomfortable with the huge foreign exchange gains of 11-12m in 2007 n 2008, like almost half of the yearly profit (can see from the annual report notes),didn't check 2009 so cannot tell if the EPS has any forex effect. the fact that forex gains seems to be part of their 'normal' operation make me kiasu. maybe i am looking too 'deep' into nothing. but congrats horse, for making a good trade.

horse said...

thanks hng & ccdev,
lately quite busy, not much time to post here.
in fact if market surge further, sourcing for undervalue stocks getting tougher, sooner there won't be much left. by then it is time to take a rest.

hng - i notice that u hold stock a little bit longer now, seem like most of them garner quite a fair bit now, especially pharma. Couple with huge volume, yr profit must be very substantial now. Well done. :)

K C said...

I just read horse's recommendations on FAVCO and did a quick analysis of FAVCO's financial statements. I think it is still an excellent buy at 0.98 now. Besides healthy profitability and balance sheet, it has fantastic cash flows from operations of 54 sen per share last year, or an average of 30 sen for the last 4 years!If one were to use discount free cash flow analysis to value FAVCO, its true value should be much, much, much more than its market price now? Can anybody enlighten me why is the market price of FAVCO is so low?

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