Oceancash Felts Sdn. Bhd. (OFSB), a wholly owned subsidiary of Oceancash Pacific Berhad (OPB), is principally involved in the manufacturing of resinated felts and thermoplastic felts for heat insulation and sound insulation which include but not limited to; interior and exterior trims in automobiles, noise damper for compressors of split unit air conditioners as well as insulation in buildings including roofs, walls, partitions, and carpet underlay.
Key word : According to the Chairman, the PPE will be contributing postively in 2nd half of 2016. To look at the info in details, the breakdown for the 2 more signifinact investments for PPE are as per below:
RM9.1m for Plant and Machinery
RM4.1m for Building Under Construction
Under Accounting Treatment for Cash Flow, the column for 'Investing Activities' is good if it is in negative value. It means the company is spending monies to increase the potential income in the near future for Investment Activites via PPE. Definately it is fair for us to expect the company to achieve higher revenue and profits for 2nd half of 2016 onwards after much monies spend. By the way, we are waiting for 4th QR Report for 2016 right? =)
Additional note, receivables has gone down from Rm3.1m to Rm1.6m.
CAGR of 19.9% from 2011 to 2016. (N =5, PV = 3.7, FV = 11)
OCEANCASH PASSED ALL MY FINANCIAL HEALTH RATIOS !
Forecast Future PE by using EPS 3 Quarters for 2016 and annualized it =4.13
Let's look at the potential plus point:
The projection of increase of EPS for final Quarter 2016 is doable. Why I say so?
9 months PAT for 2016 (Figure 4) = RM 6.932m
9 months PAT for 2015 (Figure 5) = RM 7.086m
A shortfall of RM0.154m for year 2016 compared to year 2015.
THE BEST PART MOST OVERLOOK IS AT FIGURE 6, item B3:
Look at what the Management Team said:
Baring unforeseen circunstances, performance for FY 2016 to be better than FY 2015.
Current 9 months of P&L, PAT for year 2016 is lower than 2015 at RM154k!
Assuming worst case scenario: If the Management guidance/projection is correct, the forecasted Final Quarter of 2016 should be AT LEAST to match the same earnings as 2016 (4th QR 2015) RM 1.836 + RM 0.154 (short fall of 9 months 2016 VS 2015)= RM1.99m
BY RECORDING A PAT OF MINIMUM RM 1.99M FOR 4TH QR 2016: The 4th QR 2016 results will be better than 4th QR 2015.
4. Catalysts for 2017:
CATALYST 1: Potential good 4th QR 2016 Report
'Nonwoven division has ordered a spooling machine to upgrade its production capability'
From Figure 8: We can see that the QR Report for Q3 2016 is the highest Recorded which matches the statement given as per Figure 7. What do you think about the upcoming Q4 2016 Results?
Under Bursa Listing Requirement for Main Market, a company is qualified to be transferred to Main Board if the company is able to achieve an aggreagate of RM20m PAT from the lastest cumulative 3 years of annual report.
PAT 2014 = RM 4.91m (Figure 3)
PAT 2015 = RM 8.72m (Figure 3)
Total PAT = RM 20.562m
The good part is, the RM20.562m has already being achieved without adding the final 4th QR 2016 report ! Any profits recorded in 4th QR 2016 Report will be a bonus.
The bad side is the company is exposed to the currency risk. If RM is strengthening in 2017, then it will impact and reduce their P&L. The slow growth of vehicles sales in 2017 might dampen the growth for the Felts Division.
Another limitation is the forecast for 4th QR 2016 is based on personal opinion from the guidance from the Annual & Quarterly Report.