Plywood, Anyone?

Simple understandable business

Focus Lumber Berhad (“FLBHD”) was identified as of the fundamentally-screened Malaysian-listed counters (in an earlier post see link).

The company was incorporated in Malaysia on 30 October 1989 as a private limited liability company and was subsequently listed on the Main Board of Bursa Securities on 28 April 2011. Its principal activities are manufacturing and sale of plywood, veneer, Laminated Veneer Lumber (“LVL”), and investment holding. Plywood is the core product, generating the bulk of the Group’s revenue.

Technically, it appears that there may be support at around RM1.25, of which this may offer potential entry for short term trading opportunity.
TA_5197.MY.jpeg

Morningstar has pegged a target fair value of RM1.70 per share for this counter (see link):

Mornigstar_FV.png

The catalyst will be primarily driven by its export business. Assuming (1) MYR continues to weaken; and (2) growing optimism in global economy, we may see potential growth in the Company’s business performance. MYR is expected to weaken against the USD in the near future :

MYR Forecast.png

Nevertheless, the key challenge will lie with the rising price of its raw materials (i.e logs) as well as labour costs:

Increasing log price.png

As per its latest quarterly result, Management expects the operating environment to remain challenging:

FLBD_Prospects.png

Despite the sell-out by local prominent investor Mr Koon Yew Yin, the comforting point is that there are recent buy trades by key management / substantial shareholders:

Insiders_Sep 2016.png

LinHaoYu.png

It is important to note that the above analysis is a simple high-level desktop analysis. This does not substitute for the need to perform further detailed fundamental analysis of the Company.

DISCLAIMER: THIS IS A PERSONAL BLOG AND SHALL NOT BE RELIED IN WHATSOEVER MANNER BY ANYONE. ALL ARTICLES CONTAINED IN THIS SITE ARE FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY, COMPLETENESS AND TIMELINESS. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES OR INSTRUMENTS MENTIONED ABOVE.

Author: Ken Utau

Data Scientist, Markets Analyst and Food Lover

1 thought on “Plywood, Anyone?”

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