KIMHIN (5371) - Stock Review – KIMHIN(5371)-2 (KIM HIN INDUSTRY BERHAD)

image source from Big Chart Marketplace

image source from Big Chart Marketplace
Bursa Malaysia - 5371
Bloomberg - KHI:MK
Yahoo - 5371 .kl
Webpage -

Recommendation: -

Current Price (RM)
Accumulate Dividend (RM)
Gain / Loss (%)
On 14th November 2015, I had first written about KIMHIN and recommended a buy at RM 1.89. Now KIMHIN including dividend receive on ex-dividend date 26th April 2016 is down by 4.23%. I currently has some position on KIMHIN and my entering price is higher than RM1.89 as for some of you that follow this blog closely KIMHIN start to gain momentum on the next day after the first post and reached it all time high at RM 2.51. Would I still holding these stock which is currently paper lost or to cut my losses? I will tell you guys at the end of this post after reviewing KIMHIN 2015 annual report and the most recent quarterly report.  For those interest to read the first review on 14th November 2015 you can find it here.
Annual Report 2015

From 2015 KIMHIN annual report, KIMHIN operates in four countries as follows:

1)  Malaysia – 68.48 % of revenue
2) China – 17.61% of revenue
3) Australia – 15.95% of revenue
4) Vietnam – 0.2% of revenue

KIMHIN earning per shares for 2015 is 24.50 sen compared to 17.03 sen reported in 2014. Besides that, KIMHIN had RM 12,058,000 classified as foreign transaction gain in the others comphensive income due to depreciation of Ringgit Malaysia against Australia Dollar and China Renminbi in 2015. In 2015, KIMHIN cash and cash equivalent had increase from RM 43,654,000 to RM 56,749,000 and the total debt had reduce from RM 10,173,000 to RM 9,208,000.

è KIMHIN cash and cash equivalent had increase by 30%.
è KIMHIN total debt had reduce by 9.49%
è KIMHIN had RM 12,058,000 gain due to the depreciation of Ringgit Malaysia in 2015. Which is not sustainable because early 2016 Ringgit Malaysia had strengthen.
Quarterly Report for First Quarter 2016

As these report out on 26th May 2016, KIMHIN stock price fall 10% on the next day. The main reason is these quarter KIMHIN had make a lost of 0.48 sen per share. These had scared some investor panic and start selling the shares at low price.

KINHIM had expenses of RM 8,339,000 stated as other expenses which is higher than KINHIM other expenses for the entire year of which are RM 7,280,000. Although the quarterly report did not state clearly what are the other expenses, in accounting other expenses included the operational and non - operational cost such as depreciation, discontinued operations expense , maintenance cost of fixed asset and ect.

On 17 December 2015, KIMHIN entered an SPA agreement to buy the ceramic tar manufacturing factories from Johan Ceramic. The factories had stopped operation hence I believe some of the cost required to expense during 1st Quarter of 2016 to start back the operation of the factories which KIMHIN had reported as other expenses. If I am correct the other expenses will be one time payment and it does not affect KIMHIN future earning.

Besides that, the appreciation of Ringgit Malaysia on the first quarter of 2016 had decrease the earning of KIMHIN oversea operation when the convert the fuctional currency to presentational currency using temporal method. KIMHIN recorded comprehensive lost of RM 7,193,000 for these quarter due to currency exchange.

è KIMHIN had report earning of -0.48 sen per share mainly due to other expense which it did not stated clearly.
è The strengthening of Ringgit Malaysia in first quarter 2016 had decrease KIMHIN profit from its oversea subsidiary.

KIMHIN 2015 annual report shows that KIMHIN is still a good company to be invested in. Although KIMHIN had make a lost for the first quarter of 2016 which the main reason is the increase of other expenses, I believe the other expense is one time expense and it will not effect KIMHIN future earning. After detail analysed KIMHIN. I could see KIMHIN is a potential company which can grow with little debt. Hence I would maintained my recommendation as BUY to KIMHIN.

Summary of Stock Reviews

KIMHIN (5371) - Stock Review – KIMHIN(5371)-2 (KIM HIN INDUSTRY BERHAD)