To me, nothing special during this CNY. But I did notice 2 matters about HOMERIZ, they are the release of annual report 2010 and latest quarter report. I believe you have read my first cover on HOMERIZ in my previous post.
No doubt, I've vet through HOMERIZ annual report. The AR information are more or less the same as what I've gathered and studied earlier, except the top 30 shareholders. I'm surprised to see that there are quite some fund managers are investing in this company. I thought it is a penny and sunset stock. My guess is due to the attractive 6%+ dividend yield and the solid fundamental of the company.
In complement with it's latest quarter report, it's a disappointed one and out of my expectation. The revenue and net profit plummeted dramatically compare to last year same quarter. And it's slightly going down compare to previous quarter. The main reasons are because of the further sales drop in Europe and the market share expansion in other countries is not running on par with the Europe sales drop.
By looking at it's current major drawbacks, if HOMERIZ continue to maintain in the same position, it may make lesser profit, as the sales volume growth is negative while Europe demand is decreasing and yet to be recovered. The completion of the new factory will not help with the drop of the sales volume.
If this is the case, they may not able to distribute the same or higher dividend yield to the shareholders. The appreciation of RM to USD is also one of the major woes for HOMERIZ. The profit margin has been gradually eroded.
If this is the case, they may not able to distribute the same or higher dividend yield to the shareholders. The appreciation of RM to USD is also one of the major woes for HOMERIZ. The profit margin has been gradually eroded.
With 2 major drawback in mind, I would foresee they are short-term issues for HOMERIZ, as they are aggressively looking for market share penetration in other countries instead of rely on Europe market. Nonetheless, there is possibility that the revenue and profit will continue to shrink further, at least for another one or two quarters. Thus, it may affects the share price even it is undervalue now.
Anyway, I don't see the share price drops further upon the release of latest poor earning. Perhaps the majority of the minor shareholders are waiting for the AGM to confirm something, which will be held very soon.
While waiting for the U-turn for HOMERIZ, may be it's wise for us to look for other better opportunity if we are lack of bullets?
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