Q2 result was within expectation. Although the performance was slightly deviated from my earlier prediction, due to a sudden one off cost incurred.
The group mentioned no impact on the reported quarter from the MCO impose as the MCO took effect after the financial quarter. The increase in revenue has also reflected that no impact on overseas market from Covid-19 during the reporting period.
The increase in the Group’s PBT for 1HFY2020 by 28% was mainly attributed to the higher revenue achieved and lower of unit price purchased of certain raw materials compared to 1HFY2019.
Despite higher turnover, the decrease in the Group’s PBT for Q2FY2020 by 2.8% was mainly attributed to the higher one off cost incurred in Q2FY2020 compared to Q2FY2019.
The group does not mention the detail of the one off cost.
Comment:
1. Q2 FY20 was predicted to contribute a higher revenue mainly due to higher currency rate USD/RM.
2. One off cost incurred under this quarter has drastically reduced the gross margin from 23% in preceding quarter to 13%.
3. The coming Q3 will have severe impacts on the group's profit, as the group might only operate for less than a month due to MCO lock down. In addition, the group suppliers (Europe) and customers (USA) are having lock down in their own countries as well.
4. I expect low operating activities in Q3 and the group financial performance will turn into red. Revenue will decrease near to zero yet high operating costs which causes EPS expected to reach -1.77sen.
5. Notwithstanding the massive city lock down happened globally that might impact the group's sales, I believe the group will regain its performance in Q4 partly due to strong currency and faster economy recovery from USA.
6. Target price for FY20 with the PE of 8 should be RM 0.35. The target price has considered a loss of profit in Q3 and the loss have weaken the first half financial result.
Homeritz is still moving in a major downtrend. At the moment no buy signal for this counter.
No comments:
Post a Comment