Furniture is hot now, but what is even hotter is a company that people overlook like AHB.
AHB is a company that need no further introduction for the name "awright" tell it all.
We know it is hot, it is valuable and most importantly it is cheap.
I won't waste our time on this and that, you can google for all the information but can you see the hard facts of this company: what is it really value and what it is really worth.
Let us see AHB's worth six months ago and now.
Six months ago,
a) earning = 0.69 sen.
b) PE of the furniture sector = 20.
So, fair value is 0.69 x 20 = 14 sen.
Currently,
a) earning = 0.69 sen
b) PE of the furniture sector = 40.
So, fair value is 0.69 x 40 = 28 sen.
Looks very unintersting.
But, stock is investing for the future and those who can predict the future will win.
Let us see the rosy picture first
a) Foreign exchange per USD improve from RM 3 to RM 3.8 (say a 15% improvement).
b) Wood price increase for the past 3 months (we assume an upward reversal of 10%).
c) AHB getting out of PN status (we assume a concurrent growth in earning of 25% from better borrowing terms and sales).
IF I were to all that into account and project it 3 months ahead.
a) earning = 0.69 sen x 1.15 x 1.1 x 1.25 = 1.09 sen.
b) PE we maintain at 40.
So, fair value is 1.09 x 40 = 43.6 sen.
However, we want to be prudent, so we reduce the PE to 30 to prepare for any unforseen circumstances.
So, the final fair value of AHB is 1.09 x 30 = 32.7 sen. As, i love hard facts worth of warrant is only 12.7 sen.
Conclusion: current price of mother is around 20 sen, so we have a margin of profit of 12.7 sen or 63.5%. I would rate it a 6/10 score for a margin of profit of 63.5% in 3 months time. So, there are still plenty of room of growth for the mother but not for the warrant with a miniscule margin of 4.7 sen.
We might be right or wrong but for long term taking a caluclated guess will always be wiser. Be my guess and make your own prediction of AHB in 3 months time, you might be even more accurate than my back of envelope caluclation.
I have not add up the synergystic effect of MedaInc and ecofirst for AHB. They share the same shareholder that are able to turnaround company in dire state to wonderful company see MedaInc and ecofirst price few years back and now and you will know that i am talking with substances. Thumbs up to the good management.
TA chart:
Good luck and Bon Voyage AHB.
Disclaimer:The information in this blog and any attachment(s) hereto is intended solely for the use of the intended recipient to whom it is addressed and others authorized to receive it. It may contain confidential and/or legally privileged information. If you are not the intended recipient or have received this communication in error, please notify us immediately by responding to this blog and then ignore it from your system. If you are not the intended recipient, any use of, reliance on, reference to, disclosure of, alteration to or copying and/or distribution of the information contained in this blog, for any purpose is strictly prohibited and may be unlawful. I, myself shall not be liable for any loss and/or damage caused by viruses transmitted by this blog or its attachments nor for the proper and complete transmission of the information contained in this communication nor for any delay in its receipt. This contains in this blog just for study purposes.
AHB is a company that need no further introduction for the name "awright" tell it all.
We know it is hot, it is valuable and most importantly it is cheap.
I won't waste our time on this and that, you can google for all the information but can you see the hard facts of this company: what is it really value and what it is really worth.
Let us see AHB's worth six months ago and now.
Six months ago,
a) earning = 0.69 sen.
b) PE of the furniture sector = 20.
So, fair value is 0.69 x 20 = 14 sen.
Currently,
a) earning = 0.69 sen
b) PE of the furniture sector = 40.
So, fair value is 0.69 x 40 = 28 sen.
Looks very unintersting.
But, stock is investing for the future and those who can predict the future will win.
Let us see the rosy picture first
a) Foreign exchange per USD improve from RM 3 to RM 3.8 (say a 15% improvement).
b) Wood price increase for the past 3 months (we assume an upward reversal of 10%).
c) AHB getting out of PN status (we assume a concurrent growth in earning of 25% from better borrowing terms and sales).
IF I were to all that into account and project it 3 months ahead.
a) earning = 0.69 sen x 1.15 x 1.1 x 1.25 = 1.09 sen.
b) PE we maintain at 40.
So, fair value is 1.09 x 40 = 43.6 sen.
However, we want to be prudent, so we reduce the PE to 30 to prepare for any unforseen circumstances.
So, the final fair value of AHB is 1.09 x 30 = 32.7 sen. As, i love hard facts worth of warrant is only 12.7 sen.
Conclusion: current price of mother is around 20 sen, so we have a margin of profit of 12.7 sen or 63.5%. I would rate it a 6/10 score for a margin of profit of 63.5% in 3 months time. So, there are still plenty of room of growth for the mother but not for the warrant with a miniscule margin of 4.7 sen.
We might be right or wrong but for long term taking a caluclated guess will always be wiser. Be my guess and make your own prediction of AHB in 3 months time, you might be even more accurate than my back of envelope caluclation.
I have not add up the synergystic effect of MedaInc and ecofirst for AHB. They share the same shareholder that are able to turnaround company in dire state to wonderful company see MedaInc and ecofirst price few years back and now and you will know that i am talking with substances. Thumbs up to the good management.
TA chart:
From the above chart, we can see the MACD and RSI is showing uptrend signal. In terms of volume made by yesterday, is it possible it will continue up? You get my answer, I say it would be one day show. Start the following day it might correction back to 0.185 level than only will rebound (it depends on the market condition). If market sentiment is bad, no matter how good FA the stocks are it also will going down. Agree with me? Let's see what will happen later.
Good luck and Bon Voyage AHB.
Disclaimer:The information in this blog and any attachment(s) hereto is intended solely for the use of the intended recipient to whom it is addressed and others authorized to receive it. It may contain confidential and/or legally privileged information. If you are not the intended recipient or have received this communication in error, please notify us immediately by responding to this blog and then ignore it from your system. If you are not the intended recipient, any use of, reliance on, reference to, disclosure of, alteration to or copying and/or distribution of the information contained in this blog, for any purpose is strictly prohibited and may be unlawful. I, myself shall not be liable for any loss and/or damage caused by viruses transmitted by this blog or its attachments nor for the proper and complete transmission of the information contained in this communication nor for any delay in its receipt. This contains in this blog just for study purposes.
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