Monday, 5 October 2015

Homeritz - Home ERITZ

*On June 2015, HOMERIZ had acquired the remaining 35% of EISB and EISB had become HOMERIZ wholly-owned subsidiary

Principal activities
Ø  Design, manufacture and sale of upholstery furniture products, comprising leather and fabric-based sofas, dining chairs and bed frames
Ø  Has a diverse customer base spanning across more than 40 countries, including Europe, Australia, New Zealand, North and South America, etc.
Ø  HOMERIZ own brand of lifestyle furniture series under “Eritz”

Financial Highlights
Year/ Quarter


Year/ Quarter


From FY11 to FY14, HOMERIZ revenue had a compound annual growth rate (“CAGR”) of 12.29% while its net profit had a CAGR of 23.26%! Based on the FY15 first three quarters, HOMERIZ revenue and net profit are very likely to achieve a new high.

The excellent financial results are probably because of higher sales volume and strengthening of USD.
Net borrowings, RM’000
Free cash flow, RM
Net cash, RM
*as at 31 May 2015

HOMERIZ net cash on hand had increased 7 times from 2011 to 2014! It is definitely a cash rich company with almost MYR50m on hand. It totally reflects HOMERIZ financial strength. Cash is king during hard time.

Company Highlight
June 2015
  • Acquisition of the remaining 35% of equity interest in Embrace Industries Sdn. Bhd. for MYR12.17m

July 2015
  • Bonus issue 1:2 with free warrants on the basis of 1:4
  • Acquisition of an agriculture land at Johor for MYR7.68m

Weakening Of MYR
Based on the geographical information, only 0.8% of HOMERIZ revenue is from Malaysia while 99.2% are exported out to other countries!

Weakening of MYR against USD, SGD and Euro will benefit HOMERIZ! So far, MYR had depreciated about 22% against USD. That’s mean if other factors remain constant, theoretically HOMERIZ will have extra MYR3m+! That’s a lot!

Expansion Plan
On July 2015, HOMERIZ had acquired a piece of land at Johor for MYR7.68m whereby its existing manufacturing plants are located at the same place too.  To expand its business. HOMERITZ had proposed to establish a factory on the land.

Definitely, this will be a good news for HOMERIZ even though it was just the first stage. With almost MYR50m cash on hand, HOMERIZ can easily make internal funding and borrowing for this new factory.

Since the land had been acquired, there should be no obstacle for HOMERIZ to set up the new factory. By the time the factory establishes, HOMERIZ production capacity will also increase.

Acquisition of Remaining Interest in EISB
On June 2015, Homeritz had acquired the remaining 35% of the equity interest in Embrace Industries Sdn. Bhd. 

That’s mean upon completion, EISB will become wholly-owned companies of HOMERIZ. EISB total net profit will fully contribute to EISB and no longer with 65% only.
On FY14, EISB net profit was MYR11.6m. 
Let’s assume EISB net profit for FY15 is MYR13m. An additional 35% profit will contribute additional MYR4.5m to HOMERIZ financial result! It is equivalent to additional MYR1m+ net profit a quarter!

The acquisiton had completed on September. HOMERIZ upcoming quarter result is expected to achieve higher!
Dilution of Earnings
On July 2015, HOMERIZ had issued 50m warrants,HOMERIZ-WA 2015/2020, to the market.

If the warrant is in-the-money, it is possible that every single warrants will be exercise. If this situation happens, HOMERIZ will need to issue another 50m ordinary shares to the market. By that time, HOMERIZ outstanding shares will be 350m!

In the words, originally a grand prize is shared by 30 person, but now it needs to be share by 35 person! The portion that a person get definitely will be smaller compared to previously.

Price Estimation
HOMERIZ cash flow on year 2013 was MYR18.6m while on year 2014 was MYR29.6m, equivalent to increase of 28%. To recall again, HOMERIZ net profit CAGR for the past three years was 23.26%. For a pessimistic scenario, operating cash flow of MYR30m will be used in year 1 and CAGR of only 5% will be used! Since the Beta for HOMERIZ is 1.26, interest rate of 7% will be used.

Discount Cash Flow (“DCF”) model
Interest rate7%

Est. OCF


*since we can’t take forever cash flow into account, so assumption of HOMERIZ will only sustain for another 12 years after year 10 will be taken.

Total, MYR’000
(divided) Number of shares, ‘000
Value per share, MYR

PE estimation
On next financial year, EISB revenue will 100% contribute to HOMERIZ financial result.

USD will continue to strengthen since FED is likely to hike interest rate soon.

All the factors are positive to HOMERIZ, so its future earnings are estimated as below:
Est. net profit, MYR’000






Est. EPS

Est. PE
Est. Price

Technical Chart
To make it simplify, only candlesticks and RSI indicator will used. HOMERIZ had a strong resistance line at MYR1.01 and a strong support line at MYR0.90.

Currently, HOMERIZ is moving side way and retests the resistance line. It is an uncertainty whether it will break through or continue moving side way.

However, if HOMERIZ is able to break through the resistance line, the buy in signal will be form. HOMERIZ will move up to another price region.

I will be writing some stock analysis report to earn some pocket money. 

I will be writing 5 stock analysis reports and 1 comparison of same industry company report a month for a fee of MYR120/month. It will be a simple, easy to read and understandable report. It had included fundamental and also technical analysis.

For full sample report of HOMERITZ, you may download and have a look, as below:

You may also refer some of my articles as below:
1. Export-Oriented Company Not Necessarily Benefit From Weakening Of MYR  --> Tongher

2. How to Spot Unfavourable Factors of a Company? --> AYS

3. Consistently Profit Making Company Not Necessarily Is Good --> London Biscuit

4. The Art Of Investing – How To Survive During Market Downturn

In addition, you may request to carry out a research on a specific company that you wish to know, for a fee of MYR25/report. For those who subscribe monthly, there will be no extra charges.

For those who are interested, you may contact me at or 016-9392726. Or you may leave your email below, so that I can contact you.


Thursday, 24 September 2015

Road to Success – Journey to Financial Freedom

I started to write on 11st August 2015. So far, I had shared 24 articles within 1 and a half month. Thanks everyone for the comments, either it is good or bad. I hope you are able to gain something from my articles. I am still in the process of learning as well. Just to share something about myself.

I was born in year 1992, age 23. I completed my degree in Actuarial Science on year 2014.

During the first 2 years of my degree, my life was just playing games, futsal and “yamcha” with friends. I don’t have a direction where should I go after graduate. However, along the third year, I slowly found my interest and dream.

In my degree life, I learnt business finance, portfolio management, financial statement analysis, micro macro economics and financial economics. However, everything is just in theory and without any real life explanation and practical. Every examination and tutorial is just spoon feeding with all the information, all I need to do is put in the formula to get the answer. Sometimes I don’t even understand what it stands for even though I get the correct answer.

The course did not teach me any real life knowledge about shares market. I don’t even know how to read the economy part in a newspaper.  Luckily, I get my first investment book which the author was Cold Eye. From there, I started to absorb and gain knowledge about Malaysia shares market.

When I first know there were 900+ listed companies in Malaysia market, I was shocked. Where am I supposed to start? Which segment should I focus on? And, even though I understand the knowledge of PE, ROE, NCAV, NTA, current ratio, debt ratio, etc., where should I find all the information that I need to calculate?
GOOGLE was my best mentor during the hard time. I slowly develop my own excel sheet and a list of shares which I had studied before. From every company research, I gain new knowledge. From there, I improved and refined my works from time to time. However, it is impossible for me to study one by one. I need a team or group to do this together. I tried to influence my friends to join me, unfortunately no one is interested.

Even though I am alone, I am still continuing with my research. I tried my best to cover as many as I can. I take it as my hobby where I am happy to do it. By the time I am ready to step into real life investment, I realize I had not much money to invest as I just graduate. In fact, I still have huge PTPTN loan to return!

I started my shares investment journey only by end of February 2015. During that time, it was the recovery period of shares market. I am doing well in my first portfolio. I am very keen to stick with Cold Eye and Warren Buffet theory, which is to hold for long term. However, I failed.

I remember when I first bought Homeritz at MYR0.99, it took 1 to 2 months for it to up to MYR1.20 and then it only took 1 to 2 weeks to drop back to MYR0.96! I keep asking myself why don’t I take profit when the price was still MYR1.20. I had wasted 2 months holding for nothing.  On the other hand, I saw people flying Wintoni during that time. In 2, 3 days, they had gained more than 20%! It was so attractive! At last, I was influenced and changed my concept which leads to lose trade more than win trade.

I learned and I gained along the journey. I am glad I experienced the downtrend during this moment. Even though I loss part of my money, but I believe it will make me a better, stronger and more experienced investor. A good analyst doesn’t mean he/she is a good investor. At least I found my own method and strategy of holding now.

However, as time pass I realize I need a team to do it together. I don’t have anyone to discuss with or point out my mistake. One person can walk very fast along the journey, but without a team I will not be able to walk too far. So, I started to write and share some articles.

It is never easy to start from nothing until I had something today. Look back at the past 1.5 years journey, I am glad for who am I today. And, my journey had just started! This journey will be a long one, but I believe I can walk till the end.
You are never too old to set another goal or to dream a new dream. The time for action is now and it's never too late to do something. The opportunity only waits for person who is ready! We will be success, not immediately, but definitely!

One day, I will achieve financial freedom through shares investment, by the age of 45. One day, I will set up my own company which principally involve in research, analysis, education and fund management.
Thanks for all the comments either it is good or bad. Thanks for all the support words; indeed it gives me motivation and boasts up my passion. I will continue writing and learning!

I will be writing some stock analysis report to earn some pocket money. It will be a step nearer to my dream. I will be seriously happy if some of you willing to support me.

I will be writing 5 stock analysis reports and 1 comparison of same industry company report a month for a fee of MYR120/month. I believe I can bring out something that normally financial institution equity analyst will not write and notice. It will be a simple, easy to read and understandable report. It had included fundamental and also technical analysis.

You may download a sample report of SAM Engineering as below:

You may also refer some of my articles as below:
1. Export-Oriented Company Not Necessarily Benefit From Weakening Of MYR  -->Tongher 
2. How to Spot Unfavourable Factors of a Company? -->AYS
3. Consistently Profit Making Company Not Necessarily Is Good --> London Biscuit
4. The Art Of Investing – How To Survive During Market Downturn

In addition, you may request to carry out a research on a specific company that you wish to know, for a fee of MYR25/report. For those who subscribe monthly, there will be no extra charges.

For those who are interested, you may contact me at or 016-9392726. Or you may leave your email below, so that I can contact you.

Just for sharing :)

Tuesday, 22 September 2015

What Is The Potential High Return Stocks?

Most people like to ask, what stocks are able to give a high return in short period?

As an investor, I can’t answer you on this but I can tell you what type of company you should focus on - company that acquired another profit making business.

Acquisition is a corporate action in which a company buys most or all of the target company's ownership stakes in order to assume control of the target firm. Acquisitions are often made as part of a company's growth strategy whereby it is more beneficial to take over an existing firm's operations. Acquisitions are often paid in cash, the acquiring company's stock or a combination of both.

What is the effect of business acquistion to a company? How powerful is an acquisition?

I would like to share about two examples.

Inari Amertron Berhad was formed following the merger and acquisition of two EMS providers: Inari Berhad and Amertron Limited.
The following is the annual result for Amertron Group before acquired by Inari. Based on three year average, Amertron was able to achieve USD4m profit after tax, which is equivalent to MYR12.7m (USDMYR = 1 : 3.18) during that time. 

That’s mean if Inari successfully acquire 100% of Amertron, they will take all its net profit into account in the next financial year! With an additional of MYR12m+ a year, definitely Inari financial result will fly! Let’s have a look at Inari financial result before and after acquistion.


Basically, Inari net profit had increased 400% in addition with the robust of the industry!

Furthermore, don’t forget the acquisition is only costs USD32m! With only USD32m, Inari can make extra USD4m a year! The PE ratio for this acquisition was only 8!

The below is the price chart of Inari. Its price went from MYR0.40 to MYR3.30 today, 700+% increase over the 3 years! This is crazy.

Another example is SKP Resources (“SKPRES”). On 2014, SKP acquired whole three subsidiaries under Tecnic Group Berhad.
The cost of this acquisition was MYR200m!

TECNIC net profit on FY14 was MYR19.5m, that’s mean SKPRES will have additional MYR19.5m net profit taken into its financial result after acquisition! The PE for this acquisition is 10.20, still acceptable.

The net profit of TECNIC was only taken into account on FY15. As above, SKPRES’s revenue and net profit had increased significantly.

Have a look with SKPRES price chart as well. After the acquisition, its price moved up from MYR0.70 to current MYR1.40, equivalent to 100% gain in less than a year! 
From the two examples above, it proved that acquisition of certain profit making company will lead the company to a new milestone. In term of its price and financial result, both also will go to a new high level.  Definitely, this is the company that we need to focus on and catch.

All you need to do is to carry out some simple homework by reading its circular. If you willing to spend some time to understand some important details, with this small effort and knowledge, you might easily earn up to 2-3x return!

So, what will be the next potential company that probably carries out the same things? Which will be the next Inari and SKPRES?
This? The rest I will leave it for you to study.

Just for sharing.

Monday, 21 September 2015

How To Pick A Stock Before Putting Your Money In?

It may seem like you should do your homework before putting all your cash in a company's stock, but in fact many people don't. With that in mind, here are some questions investors should ask -- and answer -- before buying a stock.

Of course, knowing all the answers doesn't guarantee a winning stock. Nothing can do that. But over the long haul, taking the time to consider these questions will make one a better, more well-informed investor.

I will carry out an illustration by using ECS ICT Berhad as example.

1. What Does the Company Do?
Before invest in a company, we need to know what is the business about.  As a shareholder, I think we had the obligation to understand the business nature.
ECS was principally involved in

  • Distribution of ICT products
  • Enterprise systems
  • Provision of ICT services.
ECS business activities lie predominantly in the distribution of ICT products and enterprise systems. They purchase ICT hardware and software from multiple international leading ICT principals such as HP, Cisco and Microsoft, and distribute them to resellers which typically comprises of system integrators, corporate dealers and retailers. Some examples of common products includes servers, PCs, notebooks, printers, scanners, wireless products, LCD monitors, operating systems, system management tools and ICT security products.

2. Is The Business Sustainable in Future?

We definitely need to make sure it is not sunset business. It must be sustainable in future. For example, if the company business is related to films and frame, I surely will not invest in it.

Exports and Imports of Telecommunication, Computer and Information Services in Malaysia
Distribution and Growth Rates of ICT Services by Sub-sectors in Malaysia: 2000-2015
As we can see on the above, ICT industry is growing rapidly in the past 10 year. The continuous advancement of technology brings about frequent hardware and software improvements as well as the introduction of new technologies. So, ICT industry is expected to continue expand and grow in the next few years, either with fast pace or slow pace. The number of international ICT brands in Malaysia market will also grow in line.

3. Is the Company Profitable?

Investors can read the quarterly and annual earnings reports to check out how much net income the company reported and in per-share earnings.





ECS has a history of steady earnings growth. In first two quarter of FY15, its revenue and net profit are greater compared to the past 4 year.

4. How Clean Is the Company's Balance Sheet?

An investors need to be able to read over a company's balance sheet. Is the company saddled with a huge amount of debt compared with how much it earns? Checking out a company's earnings alone doesn't tell you if the company has borrowed to achieve those earnings. However, one doesn’t need to have accounting basic to go through the balance sheet, just make it a simple one.
Net borrowing, MYR'000
Cash on hand, MYR'000
Debt ratio
ECS has no borrowing at all for the past four years and it has MYR90m cash on hand! It is very healthy in term of financial condition.

5. Who Runs the Company?

This is one of the main things that we need to look into. Management qualities reflect positively on the company's stability. Any company will have a website that lists the management team, how long they have been with the company and their background. Or, it can be found in annual report as well.
It needs to beware when someone takes over the decision maker position, especially from father to son.

Foo Sen Chin (“Foo”)
Executive Chairman
Age: 67
  • Bachelor of Science degree in Electrical and Electronic Engineering from the University of Birmingham, United Kingdom;
  • Master’s degree in Business Administration from the Cranfield School of Management in the United Kingdom

Soong Jan Hsung (“Soong”)
Executive Director / Chief Executive Officer
Age: 51
  • Bachelor of Science (Honours) majoring in Mathematics from the University of Malaya
Mr. Foo is the founder of the ECS while Mr. Soong began his career in ECS two years after ECS’s commencement of business. Both of them have 30 and 28 years experience in this field. They contributed significantly to the Group from non listing to listing and maximized shareholders’ wealth by improving ECS revenue and profit.  The company performance itself is the best indicator to reflect the management quality.

6. What Are the Company’s Risk Factors and Catalyst in Current Economy?

Implementation of GST
GST was implemented in Malaysia on 1st of April, to replace the zero per cent under the Sales and Service Tax regime. Definitely, there will be an initial slowdown in ICT sector due to the market's reaction to the GST. The expected impact is likely to be an overall slowdown in consumer sentiment and ICT spending, most notably in the consumer retail segment.

Smaller companies, particularly small and medium enterprises, will be more affected by the GST with most delaying their ICT investments for now. I expect ECS second and third quarter performance will be slightly moved down.  

Depreciation of MYR
MYR had depreciated 30% since last year until now.
USD1 = MYR3.30 as at 1st September 2014
USD = MYR4.30 as at 10th September 2015

ECS was purchasing its ICT products from its global brands ICT principals, where all of them are from foreign country. That’s mean ECS was purchasing using foreign currency and selling to third party using domestic currency.
As above statement, approximately 33.8% of purchases are priced in USD. Theoretically, strengthen of USD against MYR by 10% will reduce net profit by MYR2.5m! The management just hedge part of its exposure only.

In term of good catalyst, I don’t see any so far besides than its excellent financial result. There is no merger and acquisition or expansion. However, this year is ECS 30th anniversary. There might be a possibility that ECS will declare special dividend or bonus issue!

7. Is The Company Cheap In Term of Price?

A good fundamental company doesn’t mean it is cheap. For example, you saw a very nice NIKE shoes but it costs MYR1k, will you still consider?

As at 11st September 2015,
Price: MYR1.42
Outstanding shares: 180,000,000
Market capitalization: MYR255.60 million
52 week range: 1.02 – 1.83
P/E: 7.43
D/Y: 4.23%
ROE: 14.58%
NTA: MYR1.31

Based on above parameter, ECS’s PE is very low and its D/Y is attractive.

ECS’s FY14 net profit was MYR29.43 million. By using CAGR of 7%, ECS is expected to achieve a net profit of MYR31.49 million on FY15. It is equivalent to 17.5 cent earnings per share. By referring to the table below, obviously it is achievable. With a PE ratio of 10-11, ECS will have a fair value of MYR1.75 – MYR1.93.  
Financial year



It still has 20%+ room to move. So, I think it is still fairly cheap.

By answering the 7 questions above, I believe you will have your answer to decide whether to invest or not.  Of course, there is no right or wrong whether to pick or not, as everyone had their own method of investing. Find the company that suits your criteria the most.

Just for sharing.

Wednesday, 16 September 2015

Case Study - Investors Or Speculator?

Shares market itself is a very sensitive place. No matter how the analysts and economists estimate the future trend, the winner will still be the market. The movement of market is depending on market sentiment and supply demand, which is actually unpredictable. This is also the uniqueness of the share market.

Indeed, the market itself is not a rational place. It might not have a reason behind why it suddenly moves up and why it suddenly moves down. As an investor, the only things we can do are to look through the whole picture and pick stocks based on its catalyst, fundamental.

However, no matter how bad the fundamental of a company is, as long as it had little bit related to current theme played by speculator, eventually it will still “digoreng” up. 

One of the examples was VSOLAR. It went from MYR0.15 to MYR0.35 in two months time, which is equivalent to 133% return. The highest it reached before was MYR0.45.  

Obviously, the uptrend is not supported by its revenue and profit or any improvement. VSOLAR is a loss making company which it had made losses for more than 32 quarters continuously!

So, what is the reason behind the VSOLAR bull trend from Dec 14 to Mar 15?

VSOLAR is principally an investment holding company as well as renewable energy, media publishing, software solutions and production house.

If I am not mistaken, speculators related the theme of “Solar” and “GST software” with VSOLAR during beginning of the year 2015. They took this opportunity to lift up VSOLAR. When the price is going up without the support of its revenue and profit, it is just like a timing bomb and the speculators are holding the bomb and passing to each other. When the bomb times up, it is time to say goodbye to the unlucky one. The market maker took profit and disposed all their VSOLAR shares when they had satisfied with the amount. VSOLAR dropped from MYR0.35 and back to its original value. Now, it is only MYR0.085 which is lower than its previous price before it “digoreng” up.

The saddest thing is I still saw some people commented that they had averaged down by collecting more. I can’t imagine how their investment on VSOLAR is right now. Indeed, it is nothing difference with gambling! 
Another example is K1. Since the crude oil crisis on Dec 2014, K1 started to move up again from the price of MYR0.35. It took 5 months to reach MYR0.65, which is equivalent to 86% return. 

Based on its quarter report before FY15, it is profit making company with consistent earning. So, it is reasonable why its price moves up slowly.

However, after FY15Q1 report out, K1’s earnings dropped more than 70%! Subsequently, the next two day, it dropped to MYR0.305. It only took 2 days to drop 51%! Even until now, K1 are still not coming back yet. I believe one of the reasons is fear and it caused most investor no longer interest in K1.

If based on K1 fundamental, I am very sure theoretically this should not be happen, at least it is still profit making. But, this is shares market. I believe there are some market makers behind this. Coincidently, K1 quarter earnings dropped significantly. So, they took this chance to dispose everything and it caused fear among the investors.  Of course, this is just my thought, I might be wrong too.

However, if you are an investor and had some knowledge in shares, you might not fall into this.

1st support line was set when the price breakout. The support had been shifted up to 2nd line once it breakout to a new region. Subsequently, we moved the support to 3rd line followed by another breakout. The concept is very simple, once the price retested the support line few times and eventually dropped below the support line, it means that it is time for us to take profit. Besides that, the shooting had been formed at the top. So, it is also another signal that the trend had started to change.

I believe the reversal of trend most probably caused by insider news. There will be some employees or friends who know the first hand news that K1 quarter earnings drop significantly. So, they disposed of their shares first before the report released.

Let’s say even though you fail to sell it before the report released. But, at least you will still sell it once you saw the report because it’s a change in K1 fundamental.

In addition, it is a very long bear engulfing candlestick. At least, you will not trying to average down by collecting again. So, this is why I am trying to emphasize that investment knowledge is important!

This is one of the case study which I tried to bring out the message of importance of knowledge. After every fail investment, we need to sort out what the reason is and what’s wrong with our strategy. Learn from every mistake. I believe it will help us to improve and gain more experience.   

As a conclusion, in order to success in shares investment, we should acquire ourselves with knowledge.  Always remember that 80% of people lose money and only 20% win money in shares market. So, which one you want to be? A speculator or an investor?  Start from today, invest in yourself rather than continue paying fees to the market. The best investment you can make is in yourself.

Just for sharing.