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%).
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