Kim Hin Industry Bhd 

KIM Hin Industry Bhd appears on track towards recovery. The company is one of Malaysia’s largest ceramic tile manufacturers, with three manufacturing facilities in Malaysia and China and producing tiles marketed under the brands ‘Kimgres’, ‘Vitrogres’ and ‘Durogres’. 

Revenue for the company has been steady, ranging between RM245 million and RM269 million from 2010 to 2013. However, net profit has been on a downtrend, with a mere RM24,000 in 2013 on revenue of RM261.1 million. 

Nonetheless, Kim Hin has seen a strong rebound in earnings this year. 

For 1H2014, it posted a net profit of RM18.7 million compared with a net loss of RM5.3 million in 1H2013. Much of this was due to a strong 2Q2014, which saw net profit of RM14.8 million, due to higher revenue and the recognition of negative goodwill of RM5.9 million from the acquisition of Kim Hin Aus Pty Ltd (formerly Norcros Industry Pty Ltd). Stripping out the negative goodwill, the company would have made an underlying net profit of RM12.4 million for 1H2014. 

At RM1.50, the stock is trading at a steep RM 1.76 or 54% discount to its book value of RM3.26. Trailing 12-month price earnings ratio is at 8.75 times. Kim Hin has net cash of RM 42.5 million as at 30 June 2014, which translates to 32.2 sen per share — or 21.5% of the current share price. 

With such a large cash pile and the stock trading well below book value, it will be seen if Kim Hin undertakes more value enhancing acquisitions, returns more cash to shareholders or becomes a potential privatisation candidate. 
 

This article first appeared in The Edge Financial Daily, on October 10, 2014.