Classic Scenic Berhad
Classic Scenic may appeal to yield-seeking investors. The company has distributed most of its earnings as dividends since 2009. Last year, dividends totalled 8 sen per share, translating into a yield of 6.6%. ROE averaged 11% over the last three years.
Edge Research rates the company a 2.25 out of 3 on fundamentals. It has a strong balance sheet with no borrowings. Net cash stood at RM15.8 million or 13.1 sen per share as at end-June 2014.
Classic Scenic is primarily engaged in the manufacturing and sale of wooden picture frame moulding and timber products. It is one of the largest wooden picture frame manufacturers and exporters in Malaysia as well as regionally.
It currently operates six manufacturing factories with a total area of 500,000 sq ft in Rawang, Selangor. In 2012, the company spent RM4.3 million to acquire a few tracts of land, totalling 338,621 sq ft, likely for future expansion purposes.
Last year, Classic Scenic saw a drop in revenue and earnings, hurt by lower export sales to the North American market. Sales declined 16.0% to RM52.4 million while net profit slumped 31.2% to RM9.1 million. Positively, net margin held up fairly well, at 17.4%.
Outlook is more upbeat going forward. Classic Scenic is expected to benefit from the recovery in the US market as well as stronger US Dollar vis-à-vis the Ringgit. North America remains its largest export market, accounting for 78% of total sales in 2013, followed by Australia, at 9.8%. The remaining 11.8% came from domestic market.
In 1H2014, pre-tax profit increased 12.0% y-o-y to RM5.5 million on the back of 8.1% rise in sales to RM29.9 million. The latter was underpinned by strong recovery in export sales to North America.
This article first appeared in The Edge Financial Daily, on October 27, 2014.