LHT Holdings reported out their FY 2012 results yesterday evening. Personally speaking, I believe the results are disappointing, viz. revenues down, costs substantially up. Comparing with the 1H results, it seems that LHT had quite a tough second half.
http://info.sgx.com/webcoranncatth.nsf/V...E003EB7BF/$file/LHT-Holdings-Ltd-31Dec12-Full-Year-Results_Final.pdf?openelement
My personal take, in the form of three positives and three negatives:
+ve: LHT were able to maintain their
gross profit margin at ~ 26%.
+ve: NAV up ~ 5% to S$ 19 cents; LHT shares currently trade at a ~ 30% discount to NAV.
+ve (I suppose it is a positive): Despite the disappointing financial result (IMHO), LHT has maintained a S$ 0.5 (i.e. point five) cents
dividend, i.e. same as last year.
-ve: Revenues down ~ 6% as compared to FY 2011. All divisions were seemingly under the cosh. It looks like it was the relatively small Timber Related Products division, which was the single biggest culprit, i.e. it saw – please pardon the pun - a ~ 63% (or ~ S$ 1 Million) revenue reduction, resulting from lesser market demand. The revenue decrease in the key Pallets & Packaging business was ~ 2% or ~ S$ 0.75 Million, and the Technical Wood Products division had a revenue decrease of ~ 31% or ~ S$ 0.5 Million, mainly from reduced overseas demand.
-ve: Administrative Expenses increased by > 26% (more than twenty-six per cent). A significant proportion of this came from higher salaries, some from depreciation. I also note that receivables and inventories moved in the wrong direction. As did leasing costs. Not a good story at all – despite LHT’s Management stating in Section 10 of the Financial Results Statement QUOTE …………… the Group will keep continuing to improve its productivity and cost control measures to enhance its competitiveness UNQUOTE, the whole cost and expenses piece of LHT’s FY 2012 Results Statement makes me wonder about managements’ cost control discipline and their automation push etc.
-ve: FY 2012
Net Profit was a disappointing S$ 3.28 Million, short of my admitedly personal expectation by quite some margin (S$ 5 Million being “excellent”, S$ 4 Million being “good”).
I also note the Results Statement was totally (and ominously??)
silent regarding the start-up of wood chip deliveries to the Tuas power plant. The previously announced window for the first such delivery comes to an end in four (4) months time. I hope we hear a positive announcement soon – a question for the AGM perhaps??
At the currently traded price of S$ 0.133, LHT shares are trading on a
P/E of ~ 8.7 with a dividend yield of ~ 3.7%. Being vested, and given the challenging outlook described in Section 10 of LHT's FY 2012 Financial Statement, I am wondering if Mr Market’s current valuation of LHT is now a tad rich? That said, it is I suppose good to see LHT eeking out a profit in the face of generally challenging trading conditions - as I have said before, IMHO the margin of safety on this counter has increased in the last couple of years.
Vested