Stock With Momentum: LII Hen

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This article first appeared in The Edge Financial Daily, on September 29, 2015.



LII Hen (Fundamental: 2.5/3, Valuation: 2.1/3) has doubled to RM7.08 since it was first recommended by InsiderAsia on February 16. 

Notably, shares of furniture makers have fared very well, thanks to the weakening ringgit which favours exporters. About 80% of Lii Hen’s products are exported to America—its single largest market.  Its second largest market is Asia (excluding Malaysia), contributing about 13% of sales.

Last month, the company released a stellar set of 2Q2015 earnings results. Revenue surged 41.3% y-o-y to RM138.3 million while net profit increased an outsized 96.2% to RM12.7 million, due mainly to higher demand for its bedding products and forex gains of RM1.0 million.

Dividends totalled 13 sen per share for 1H2015, up from 7.5 sen per share in 1H2014. As at end-June, Lii Hen had net cash of RM55.9 million – about 13% of its market capitalisation. 

The stock is trading at a trailing 12-month P/E of 11.2 times and 2 times book.