TECHNICAL AND FUNDAMENTAL ANALYSIS

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HOMERIZ (5160) - Technical and Fundamental Analysis

April 7, 2019

Technical Analysis

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- HOMERIZ completed long term rectangular consolidation pricing on Feb 02, 2018 with 3 years views perspective.

- HOMERIZ unable to trade over highest level, RM 1.088 after bonus issue on July 03, 2015.

- HOMERIZ drop and hit RM 0.590 on April 5, 2019 and we compare back to time-zone from Apr 2017 - July 2017 because RSI becomes intact currently.

- It is seen like "Big Player" exited the counter on Jan 24, 2019 with a gap down. Although there is a re-bounce and challenged EMA 120, it is considered a fall breakout due to no volume support.

- From a technical perspective, HOMERIZ will continue the downtrend.

- Resistance R2: RM 0.655

- Resistance R1: RM 0.615

- Support S1: RM 0.590

- Support S2: RM 0.566

 

Fundamental Analysis

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1) Overall Summary

 2) Market Prospect Ratios

- From HOMERIZ EPS movement trend, it is a cyclical business model. It is hard to maintain high business growth due to they concentrate in middle to the high-end customer in Europe, Australasia, North/South America, Asia, and Africa 

- With higher uncertainty in the western country, do you think HOMERIZ able to generate higher revenue in one to two years? The answer is NO! EPS reflect it absolutely.

- From dividend payout trend in the past 5 years, it saw like HOMERIZ hard to continue to maintain high dividend payout due to negative cash flow from business operations as below:-

> Operation Activities RM 23.88M

> Investing Activities (RM23.94M)

> Financial Activities (RM9.6M)

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Outflow (RM9.564M)

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3) Profitability Ratios

- HOMERIZ able to maintain a stable gross margin in the past 5 years and it shows that they have a better bargain power in the market.

- However, HOMERIZ revenue and raw material cost have a high correlation with USD movement.

- Although USD appreciates again RM in the current trend, we believe HOMERIZ still unable to generate higher revenue in the short term due to the economic downturn in western countries especially in Europe zone.

- From ROA & ROE perspective, we noticed that there is a significant drop from previous years due to HOMERIZ increase their expenditure in Plant & Machinery with lump sum RM 14M (Almost x2 compare to Y2017 @ RM8.7M)

 

4) Efficiency Ratio

- HOMERIZ maintain a very good performance in business efficiency.

- A longer period in Day' Sales in inventory is a norm business model because HOMERIZ concentrates in an export sale. They need a longer time to move stocks to western countries via shipment for sales and exhibition purpose.

 

5) Liquidity Ratios and Solvency Ratios

- HOMERIZ is in net cash position with no bank borrowing.

- They are able to meet the short-term obligation and expenses in operation requirement accordingly.

 

 

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