Thursday, November 8, 2012

A relook at Latitude Tree

I know many would not be interested in this particular stock, but I am just looking at the company - Latitude Tree. It is in the furniture industry with 95% market to United States. Nothing fantastic, but the company has been consistently doing good with some ups and downs but seldom in the red. As in my previous article, if the US housing market is making a comeback, Latitude may be doing well. US Housing market is definitely doing a comeback or at least a revival. Warren Buffett is betting big on the revival and he is positioning himself well for the pickup in the housing market.

Now back to Latitude Tree. Some may be afraid of the previous Kenmark (another Taiwanese owned) news where the company just went under, with possibly some major write-offs in receivables as well as its inability to pay its debt. Look below, Latitude is different. Its receivables are very manageable - below 10% of its total revenue.

Its debt position is also very manageable with its debt to equity less than 0.5x. The bulk of the debt are short term, dangerous if it overuse them but I do not think so as it looks more like a position for its manufacturing concern with trust receipts loaded. This means it is borrowing more for buying raw materials - seems like.

Additionally, I have checked out this company. The management does seem to be very careful in terms of its actions over the years. More recently, it announced a 3 sen dividends (up from previous year of 2 sen), hence providing 4.9% dividend yield at current price. I do not think it is a Kenmark and it uses EY as its auditor which provides the additional comfort.

To top it off, the company is trading at less than 4.2x PE with potential better numbers in near to medium term future due to its market. Price / NTA does not look shabby either i.e. less than 30%.


Newbie said...

2009 2010 2011 2012
Revenue:397.4 506.9 500.7 517.9
NP: 14.0 27.7 12.5 9.9
Margin: 3.5% 5.5% 2.5% 1.9%

Does not look attractive to me.

felicity said...

fair enough but I do not think anything in business is all about margin.

Unknown said...

try to look at Liihen and cscenic (same sector i presume)

felicity said...

Hi Zayed

Looks good, Liihen is almost of similar but only thing I am a bit apprehensive is the auditor, John Lim and Associates