PETALING JAYA: Heveaboard Bhd is anticipated to see higher monetary ends in the second quarter of 2022, as its uncooked materials – log provide – has returned to a wholesome stage, in response to Hong Leong Funding Financial institution (HLIB) Analysis.
Regardless of the under-utilisation of the group’s particleboard plant at the start of the yr, the analysis agency believes that the earnings influence from this shall be partially mitigated by the cargo of the deferred completed items from the earlier quarter, in addition to the sturdy gross sales quantity from its ready-to-assemble (RTA) furnishings phase.
“This enchancment is additional bolstered by the rising particleboard export gross sales to the Japanese market that fetch a greater margin, in comparison with different export markets.
“Whereas glue price is rising following the oil worth hike, the value stage continues to be nicely under its peak in December 2021,” stated HLIB Analysis in its newest report.
It has maintained its “purchase” name on the inventory with an unchanged goal worth of 63 sen.
The group additionally has a wholesome steadiness sheet with web money of RM95.8mil.
Following a latest digital assembly with HeveaBoard’s administration, HLIB Analysis stated the group’s particleboard gross sales quantity to Japan had elevated considerably because the second half of 2021.
Japan is now certainly one of HeveaBoard’s main export markets, it added.
“This enhance is a results of Japanese patrons diverting their orders from Europe to the South-East Asia area amid rising price arising from European wooden producers having elevated their common promoting costs considerably and enhance in logistics price,” defined HLIB Analysis.
Using on this demand enhance, HeveaBoard will make investments RM10mil capital expenditure (capex) so as to add a brand new quick cycle line to provide value-added boards resembling melamine confronted chipboard or MFC laminated boards that can present the next margin in comparison with its uncooked boards.
The group’s RTA phase has been catering to the elevated gross sales quantity to Japan.
It’s because patrons had been stocking up in preparation for the Japanese fiscal new yr, which began on April 1.
It’s a frequent custom for Japanese college students who’re dwelling on their very own for the primary time, in addition to employees altering jobs throughout this era, to buy new research or work furnishings for the brand new yr.
Additionally, HeveaBoard shall be spending RM10mil in capex to automate extra manufacturing processes.
That is with a view to mitigate the labor scarcity danger.
The group can also be spending one other RM20mil to assemble a brand new hostel that can adjust to authorities laws, with a capability of 1,500 employees for its RTA phase.
In January this yr, HeveaBoard had briefly halted its operations to clear the completed items within the warehouse and rebuild its uncooked materials stock.
Its manufacturing facility resumed operations in February and uncooked materials provide was again to a wholesome stage by March.
HLIB Analysis additionally famous that HeveaBoard introduced a remaining single-tier dividend of 1 sen per share for FY21, regardless of its web lack of RM1.2mil.
Traditionally, HeveaBoard has persistently paid dividends far exceeding its dividend coverage of over 30% of its web revenue.