Fiamma Holdings Bhd
FIAMMA’S entry into property development in 2007 has started to bear fruit with increasing contribution to its steadily growing home appliance business.

For the first nine months of FY Sept 2014, property contributed 21.1% to total sales and 39.6% to pre-tax profit, up from 9.5% and 10.8%, respectively, in the previous corresponding period.

Started since 1979, Fiamma has grown into one of the largest distributors of electrical home appliances in Malaysia. Besides its own popular house brands ELBA and FABER, the company also distributes brands such as Rubine, Braun, Whirpool, Ebac and Omron.

In 2007, the company ventured into property development with the acquisition of two parcels of prime land in Kuala Lumpur at Jalan Ampang (61,422 sq ft) and Jalan Tuanku Abdul Rahman (48,701 sq ft), followed by three parcels of land measuring 95.54 acres in Kota Tinggi, Johor, a year later.

The land at Jalan Tuanku Abdul Rahman is being developed into a commercial development that will complete by end 2014. Following that, Fiamma plans to develop the other landbank in Kuala Lumpur and Johor with estimated GDV of over RM1 billion.

Fiamma’s financials have shown steady growth, with high profit margins. Between FY2008 and FY2013, net profit grew from RM14.5 million to RM34.7 million, while revenue increased from RM178.2 million to RM292.9 million. For the first nine months of FY2014, sales grew 19.0% to RM252.1 million, while net profit rose 33.5% to RM32.2 million. From FY2011 to FY2013, it chalked up average net profit margin and ROE of 11.5% and 12.3%, respectively.

Fiamma had net cash of RM 54.2 million at end- June 2014, equivalent to 39.6 sen per share or 18.6% of its current stock price of RM2.13. The stock trades at a low trailing 12-month P/E ratio of 6.8 times and 0.93 times book.

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