Focus Lumber Bhd
SABAH-based Focus Lumber is involved in the manufacturing and sale of plywood, veneer and laminated veneer lumber. Despite poor market conditions in the past few years due to sluggish housing markets in Japan, US and Europe, Focus managed to stay highly profitable and consistently paid dividends.
Focus’ key differentiating strength is its focus on obtaining US environmental and quality accreditation and certification for its products, in order to penetrate the US market better.
In 2012, it became the first Malaysian plywood mill company certified as a CARB Certified Manufacturer for wood products sold in California. In 2012, Focus was accredited as a certified Lacey Compliant Wood Products Manufacturer, allowing for wood exports to the US under the US Lacey Act.
In 2013, 92.5% of revenue was derived from exports, with a significant 67% of sales going to the US. With the US economy recovering and the US dollar strengthening, Focus stands to benefit from both grounds.
Focus’ turnover increased from RM120 million to RM147 million from 2010 to 2013, with net profit rising from RM10 million to RM15 million. For 1H2014, revenue increased 6.4% to RM75.1 million while net profit rose 35.2% to RM7.6 million.
Dividends per share increased from 6 sen in 2011-2012 to 8 sen in 2013, or a generous yield of 6.9%. Its dividend payout ratio has also increased from 45.1% in 2011 to 54.5% in 2013.
At RM 1.16, Focus is trading at a discount of 10 sen or 8.6% to its book value of RM 1.26, with a low trailing 12-month P/E ratio of 7.8 times. The company has been building its cash pile over the years, from RM28.8 million in 2010 to RM58.7 million at 30 September 2014, which translates to a significant 56.8 sen per share, or 49% of the current share price.
This article first appeared in The Edge Financial Daily, on December 12, 2014.