The wood based furniture manufacturers has fared very well due to a confluence of factors including the weakening of the ringgit that favors exporters. Having caught the upcycle early, there is more upside to the sector, with the recovery in the USD still in the nascent stage.
LiiHen is still trading at 1.2 times book value and a single PER of only 8.2 times.
The company is backed by solid underlying fundamentals – it sitting on net cash, pays consistent and fairly generous dividends double digit ROE.
In its latest 2014 results, sales totaled rm398 million driven by a 30% sales increase from the US – LiiHen’s single largest market, which accounted for 80% of sales. Sales to its second largest market, Asia, grew 20.7% year on year while demand from the remaining markets remained steady.
Net profit was up on outsized 58.7% year on year to rm28.2 million on 2014, lifted un part by one off insurance claims amounting to rm7.2 million, which more than offset asset write offs.
The company also gained from the depreciation of the ringgit. Total foreign exchange gains more than doubled to rm5.3 million in 2014.
In Jan 2015, LiiHen recognized a revaluation surplus totaling rm35 million, boosting net assets per share by approximately rm0.58 million. Most of the revalued land and buildings are manufacturing plants located in Johor.
The company is sting net cash of rm36.1 million.
It has consistently paid dividends, with payout ratio ranging from 30% to 50% of net profit.