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Wednesday, May 24, 2017

(richDad) - LIIHEN: More than 30% upside - CASH COW (8% dividend yield)

Author: richDad1 | Publish date: Wed, 24 May 2017, 08:57 AM

1. Main business = manufacturing of furniture. These descriptions are from their website which says “Lii Hen Group is an integrated furniture manufacturer involved in a vast range of wood-base activities under one roof.” In lay man term, when you go to buy furniture, that store has to buy it from some manufacturer - and LII HEN is one of those.

To fully understand what LIIHEN does you can visit their website here

http://liihenfurniture.com/

Some of their products taken from their website



The factory





2. Good earnings growth in 1QFY17 (+5% to RM22.1m). Accordingly, EPS also increase 5% to 12.29 sen. Reason for the better earnings can be seen below.





3. Consistently paid dividend for more than 10 years! Yesterday, another 4 sen is announced. The Company has consistently paid dividend in the past 14 years.



4. A SUPER CASH COW with 8% dividend yield. Having a high dividend yield stock with stable earnings is good for your portfolio. After the recent increase in many small cap stocks, it is rare to have company with dividend yield exceeding 5%. BUT LIIHEN dividend yield is 8.1% which is super crazy. This is derived by the 26 sen dividend over the share price of RM3.20. Lastly, LIIHEN balance sheet is very strong with net cash of RM96.7m or 54 sen per share.

5. Long term value is RM4.30 per share. There is more than 30% upside that I am looking at. I think that the Company is worth 10x PE as it is exposed to consumer market. For FY17 EPS, I am assuming only a small 6% increase in earnings as USDMYR rate seems to have stabilize at around 4.10 to 4.40. Hence, FY17 EPS at 43 sen.

10x PE * 43sen FY17 EPS = RM4.30

For record keeping purpose, I am using yesterday closing price of RM3.20

1 comment:

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