Latest news with #RM8.6m
Malaysian Reserve
5 days ago
- Business
- Malaysian Reserve
Hup Seng Industries retains Neutral, target price lowered to 92 sen
HUP Seng Industries Bhd chalked in 2QFY25 revenue of RM84.8m (-7.5% quarter-on-quarter (qoq); +5.7% year-on-year (yoy) and core profit after tax and non-controlling interests (PATANCI) of RM8.6m (-19.4%qoq, -7.1%yoy) which brought 1HFY25 core PATANCI to RM19.3m (17.5%yoy). This came in below our expectations, making up only 38% of our full-year forecast. As 2QFY25 results came in below expectations, we revise our FY25–FY27 earnings forecasts lower by 12%, -13%, and -11%, respectively, to reflect softer export sales assumptions and sustained input cost pressures. Consequently, our target price is reduced to 92 sen (from RM1.04), based on a dividend discount model valuation, assuming a consistent 3.0% dividend growth and a weighted average cost of capital of 9.1%. While dividend yields remain attractive, we expect near-term earnings headwinds to limit upside potential. Maintain Neutral with lower target price of 92 sen. – MBSB Investment Bank Bhd (Aug 12, 2025) (Calls by analysts tracked by Bloomberg: 0 Buy, 1 Hold, 0 Sell; Consensus target price: RM1.04)
Yahoo
27-02-2025
- Business
- Yahoo
MN Holdings Berhad's (KLSE:MNHLDG) Earnings Are Weaker Than They Seem
MN Holdings Berhad's (KLSE:MNHLDG) robust earnings report didn't manage to move the market for its stock. Our analysis suggests that shareholders have noticed something concerning in the numbers. See our latest analysis for MN Holdings Berhad Many investors haven't heard of the accrual ratio from cashflow, but it is actually a useful measure of how well a company's profit is backed up by free cash flow (FCF) during a given period. In plain english, this ratio subtracts FCF from net profit, and divides that number by the company's average operating assets over that period. You could think of the accrual ratio from cashflow as the 'non-FCF profit ratio'. Therefore, it's actually considered a good thing when a company has a negative accrual ratio, but a bad thing if its accrual ratio is positive. While having an accrual ratio above zero is of little concern, we do think it's worth noting when a company has a relatively high accrual ratio. Notably, there is some academic evidence that suggests that a high accrual ratio is a bad sign for near-term profits, generally speaking. MN Holdings Berhad has an accrual ratio of 0.25 for the year to December 2024. Therefore, we know that it's free cashflow was significantly lower than its statutory profit, which is hardly a good thing. To wit, it produced free cash flow of RM8.6m during the period, falling well short of its reported profit of RM28.5m. We note, however, that MN Holdings Berhad grew its free cash flow over the last year. Notably, the company has issued new shares, thus diluting existing shareholders and reducing their share of future earnings. That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates. To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. As it happens, MN Holdings Berhad issued 36% more new shares over the last year. That means its earnings are split among a greater number of shares. To celebrate net income while ignoring dilution is like rejoicing because you have a single slice of a larger pizza, but ignoring the fact that the pizza is now cut into many more slices. Check out MN Holdings Berhad's historical EPS growth by clicking on this link. MN Holdings Berhad has improved its profit over the last three years, with an annualized gain of 318% in that time. In comparison, earnings per share only gained 203% over the same period. And at a glance the 106% gain in profit over the last year impresses. On the other hand, earnings per share are only up 84% in that time. So you can see that the dilution has had a fairly significant impact on shareholders. In the long term, earnings per share growth should beget share price growth. So MN Holdings Berhad shareholders will want to see that EPS figure continue to increase. But on the other hand, we'd be far less excited to learn profit (but not EPS) was improving. For that reason, you could say that EPS is more important that net income in the long run, assuming the goal is to assess whether a company's share price might grow. As it turns out, MN Holdings Berhad couldn't match its profit with cashflow and its dilution means that earnings per share growth is lagging net income growth. Considering all this we'd argue MN Holdings Berhad's profits probably give an overly generous impression of its sustainable level of profitability. If you want to do dive deeper into MN Holdings Berhad, you'd also look into what risks it is currently facing. To help with this, we've discovered 3 warning signs (2 shouldn't be ignored!) that you ought to be aware of before buying any shares in MN Holdings Berhad. In this article we've looked at a number of factors that can impair the utility of profit numbers, and we've come away cautious. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
