Buying shares of Faber Group
We are buying 12,000 shares of Faber Group at Friday's closing price of RM1.29. This will cost us RM15,480. After this purchase and the subscription to Dijaya's rights issue, our portfolio is 74% equity invested and will have RM135,567 cash for future investments.
Faber recently posted another strong consensus-beating quarter in 3QFY December 2009, helped by a good performance at both the facilities management and property development arms. This follows the strong earnings recovery in 2Q09 after a weak first quarter.
We are buying 12,000 shares of Faber Group at Friday's closing price of RM1.29. This will cost us RM15,480. After this purchase and the subscription to Dijaya's rights issue, our portfolio is 74% equity invested and will have RM135,567 cash for future investments.
Faber recently posted another strong consensus-beating quarter in 3QFY December 2009, helped by a good performance at both the facilities management and property development arms. This follows the strong earnings recovery in 2Q09 after a weak first quarter.
In 3Q09, revenue rose 21.2% year-on-year (y-o-y) to RM197.8 million, pre-tax profit increased 49.4% y-o-y to RM34.1 million while net profit increased 46.8% to RM19 million. At RM1.29, valuations are inexpensive at 8.4 times for 2009-10 earnings. The stock also gives investors an attractive yield of 3.1%, based on a sustainable four sen payout given its cash-rich balance sheet, with net cash totaling RM99.7 million in September 2009, or 27.5 sen per share.
Faber boasts defensive earnings (from facilities management) balanced with cyclical earnings (from property), a strong cash-rich balance sheet and high yields. The company has done a good job restructuring itself over the years, divesting non-core assets, strengthening its balance sheet and improving shareholder returns. And it is well-positioned for the recovery given its strong balance sheet and mix of defensive and cyclical earnings.
Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.
