FIGURE 1: HARN LEN CORP BHD LAST 2 YEARS SHARE PRICE TREND
**analysis based on 2018 annual report.
1. GENERAL INTRO: HARN LEN is one of the main oil palm plantations in Malaysia.
2. NOTABLE POINTS:
a. In 2018 report, main business segments include operation of
oil palm plantations and milling operations as well as hotel operation
(Tropical Inn, Johor).
b. The Group operates oil palm estates in Pahang and Sarawak
with a total planted area of 17,083 hectares and total annual fresh
fruit bunches (FFB) production of 180,023 MT.
c. The group also operates palm oil mill that produced 66,615
MT CPO in 2018. The reported average oil extraction rates (OER) is
20.69%.
d. For the financial year 2018, the Group reported a pre-tax
loss of RM19.7 million due to lower contribution from the Plantation
division. The downtrend was exacerbated by sustained depressed and
sluggish commodity prices of Crude Palm Oil (“CPO”) and Palm Kernel
(“PK”), and finance costs resulting from borrowings to meet obligations
and commitments of the Group.
e. In terms of hotel operations, the Group's owned hotel
(Tropical Inn) has been facing stiff competition from other providers in
the market (such as boutique hotels and Airbnb facilities). While its
average room rates has been increasing slowly (currently at RM83), its
average occupancy rate has been decreasing over the years (currently
42%). Owing to recurring losses, the Group has ceased operating the
Hotel division at the end of Quarter 1, 2019 and has placed out
invitations for interested hotel operators to lease the property.
3. IS THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE RANGE (RM million): 185.7 million as reported in 2018 annual report, this is a low revenue company.
b. SHARE PRICE: from 2018-2020, share price ranged between around RM0.50 to RM0.60.
c. EARNING PER SHARE (EPS): earning per share in last 5 years fluctuated from -12.22 to 3.43 sen
d. FUTURE POTENTIAL/PROSPECTS: share price expect to be stable in the next few years
e. CAPITAL EXPENDITURE (CAPEX): spending on purchase of new fixed assets is RM 31.5 million, around 5% of total assets.
4. IS THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND YIELD: in 2018 financial year, HARN LEN did not declared a dividend payout to shareholders.
b. CONSISTENCY: the dividend payout was not consistent, dividend
paid to shareholders in last five years (2014-2018) ranged from 0 to 8
sen per share.
c. DIVIDEND PAYOUT RATIO: N/A
5. IS THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN ON EQUITY (ROE): in 2018 financial year, HARN LEN
reported a low return of shareholders’ equity, at -7.87%. Last five
years ROE ranged from -7.87 to 1.93%.
b. COST-TO-INCOME RATIO: N/A
6. OTHER INDICATORS:
a. CASH FLOW: cash flow is positive but very low, around RM 1.06 million, equivalent to RM 0.01 per share
b. SUPPORT BY INSTITUTIONAL INVESTORS: this counter is not well
supported by institutional investors, there are only 9 institutional
investors at top 30 major shareholders list, not including insurance
companies and investment funds. Its major shareholders are LNH
Enterprise Sdn Bhd (28.37%) and Low Nam Hui United Holdings Sdn Bhd
(20.06%).
Disclaimer: The content of the blog posts are for sharing purpose
only. Readers are encouraged to carry out further research and analysis
as well as follow up latest update information before making any
investment decisions.
http://louisesinvesting.blogspot.com/2020/01/comments-on-harn-len-corp-bhd-7501.html
