Fima Corporation Bhd
LITTLE-known Fima Corporation offers investors a high yielding investment with stable income, thanks to its unusual core business – a concession to produce government security and confidential documents, and bank notes.
In FY March 2014, about 69% of its revenue and 63% of pre-tax profit came from the production of government security documents such as bank notes, confidential documents and passport materials. The balance is mostly from palm oil, where it has 50,000-acre plantation in Indonesia.
The security documents income comes largely from two subsidiaries, Percetakan Keselamatan Nasional Sdn Bhd and Security Printers Sdn Bhd. The former was privatised to Fima in 1990 and was awarded the government concession for the printing of government security documents.
Fima also has a joint-venture banknote printing company, Giesecke & Devrient Malaysia Sdn Bhd which operates the country’s only banknote printing plant.
In FY 2014, the government security production division saw revenue rise 19.6% to RM241.6 million while pre-tax profit increased 19.3% to RM63.4 million.
Over the last five years, Fima’s revenue steadily increased from RM280.1 million in FY2010 to RM348.4 million in FY2014. Its pre-tax profit was relatively stable between RM88.6 million and RM111.6 million with high net margins of 19% to 26%.
Fima offers an attractive dividend yield of 4.4%. Its payout ratio has doubled from 20.3% in FY2010 to 41.6% in FY2014. As at 30 Sept 2014, it had net cash of RM182.2 million, or 75 sen per share. Its shares trade at an attractive 12-month trailing P/E ratio of just 9.73 times and 1.29 times book.
This article first appeared in The Edge Financial Daily, on December 1, 2014.