Heng Huat Resources Group Bhd (-ve)

LISTED in July 2014, Heng Huat (Fundamental: N/A, Valuation: N/A) is a manufacturer of biomass materials such as coconut fibres and oil palm fibres, which are mainly exported to China. The Penang-based company also produces and sells fibre mattresses and other bedding accessories.

Heng Huat plans to invest RM35 million in capex to build a new oil palm empty fruit bunch (EFB) fibre manufacturing facility in Gua Musang, Kelantan. The new plant, which will increase its production capacity by one-third, is expected to commence operation in 2Q2015.

For 1Q2015, revenue increased 24.1% y-o-y to RM26.5 million, while net profit fell 4.0% to RM2.9 million, due to higher oil palm EFB costs and labour costs. 

Last month, it has proposed for a 1-for-2 bonus issue as well as transfer of its listing from the ACE Market to the Main Market.

The stock trades at a trailing 12-month P/E of 14.0 times and 2.1 times book.

This article first appeared in The Edge Financial Daily, on June 26, 2015.