In an earlier post (see link), one of the screened securities is Hwa Fong Rubber Thailand PCL (HFT or Company), which is a manufacturer of tire and tube of bicycle, motorcycle, and other types of vehicles, such as trolley forklift and golf cart.
Our high-level desktop analysis of the indicative valuation range for HFT:
- Recent 6-month results (FPE 30 June 2016) have shown marginal decline, with annualised revenue growth rate expected to be lower by approximately 1.4% whereas the Company’s PAT margin is relatively lower at 9.9% if compared to FY15 of 16.0%.
- If compared to current trading price of THB4.44 per share, the Company is currently fairly valued, with an indicative valuation range of between THB4.34 per share and THB4.51 per share.
- Some margin of safety is expected if the Company trades at below THB4.29 per share.
Technically, it is observed that there could be possible downward trend in the short term for HFT. Nevertheless, we should expect potential support at THB3.93 per share. Fundamentally, the Company’s trading multiples (e.g P/E, P/B and dividend yield) are not unreasonable at this juncture.
It is important to emphasise that the above desktop analysis is high-level and further fundamental analysis shall be required to further refine the valuation range of the stock.
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