Apollo soaring further into orbit again

Apollo soaring

further into

orbit again

  

Clarity is beginning to show up more and more  on Bursa Malaysia especially for those companies exporting their goods/products to overseas countries. No thanks or thanks to the on-going weak ringgit against the USD dollars, those companies's profits improved tremendously each time they report their quarterly results.

The latest to report very stunning results was Apollo Food Holdings Berhad. Apollo reported its 2nd Qtr 2016 results ending Oct 31, 2015 which was double over the preceding year corresponding quarter.

Apollo reported an earnings per share (eps) of 12.05 sen compared to an    eps of only 6.01 sen (Oct 31, 2014). This is an increase of 100% increase of profits. Profits was RM 20,829 million (Oct 31, 2015) compared to RM 10,527 million (Oct 31, 2014).

How did Apollo achieved such remarkable results? I scrolled its accompanying notes and compared its revenue and realised it was almost a flat comparison of both comparing quarters. In fact, there was only an increase of RM3.864 million (2nd Qtr ended Oct 31, 2015) over the RM49.932 million recorded in the preceding quarter. This was due to increase in demand from both local and export markets.

However, Apollo announced that the 100% jump in profits was due to foreign exchange gain on the depreciation of Ringgit Malaysia against the USD dollar.

This huge gain on the foreign exchange gain must be a good ones for Apollo although there were reports of tremendous savings as its new machinery has helped to bring down operating expenses down by as much as 82% to RM1.2 million.

As the Ringgit Malaysia is expected to stay weak at the RM4.00 - RM4.40 levels for many more months to come, Apollo is poised to continue to benefit from this and hence is likely to report record earnings for Financial Year April 2016.

The total eps of 26.04 sen (1st & 2nd Qtr) means on an annualised basis will most probably be an eps of 50 sen (on a conservative basis). What this mean is that Apollo is likely to reward its shareholders with a minimum dividend of 25 sen although yours truly would not be surprised if Apollo decides to make it a 30 sen dividend.

Apollo's cash hoard has also increased from RM100 million to RM116 million as at Oct 31, 2015. Trade and receivables is an impressive amount of RM35 million vs Trade and other payables of RM9.9 million only.

Cash per share is now at RM1.45. As such, Apollo is now in a sweet position to declare higher dividend or even a special dividend anytime.

Somehow, a bit puzzling to yours truly is that in all these years of operating profitable layers cakes business, management remained focus on their business and do have not taken any corporate exercise at all. Apollo has never make an cash calls or even announce any corporate exercise such as bonus share or share splits that come with warrants.

Readers would have remembered I first wrote about Apollo on Oct 7, 2013 titled : Soaring Apollo and Falling Star and subsequently another Apollo feature again on Nov 27, 2013 titled : Apollo vs Hup Seng. Since that first time on Apollo's feature, its share price was around RM4.80. As at today, Jan 8, 2016, Apollo's share price is RM5.78, up by 20% or 98 sen!

Long term shareholders would have no qualm holding on to their Apollo shares including yours truly. But wait, how come I did not mention that I was having Apollo shares when I first blogged about it on Oct 7, 2013? At that time, I could not find my contract buying note. Since then when I was doing some spring cleaning, I found the contract buying note.

Yours truly bought 1,000 shares of Apollo on May 24, 2006 at RM2.45. Since then I have qualified for 11 dividends totalling RM2,100.00 which means my cost for Apollo shares is only RM368.68.

At the current price of RM5.78, I am sitting on a very good paper profit of over RM5,400.00. And I am not likely to sell such good dividend paying company unless the price is ridiculously chased up high.

Apollo is truly another money-good son of Bursa Malaysia.

Focus Lumber Berhad

Focus Lumber Berhad is also another company benefitting from the on-going weakening Ringgit Malaysia vs the USD dollars.

Its latest 3rd Qtr September 2015 revenue was RM122 million compared to its corresponding 3rd Qtr Sept 2015 of RM109 million - an increase of only  RM13 million or 12%. But due to the gain of foreign exchange, its profits after tax was RM21 million compared to RM11 over the same corresponding period. That was an almost 90% rise!

Eps also surged to 20.37 sen compared to just 10.62 sen over the same corresponding period.

Cash also rose to RM85 million or a cash per share of 80 sen. Does this mean Focus Lumber is also in another sweet spot to declare higher or special dividend in times to come? So far, Focus Lumber has been more than above my expectation when it comes to dividend for 2015 compared to 2014. It has so far paid out a total of 15 sen for 2015 compared to just 8 sen in 2014.

But wait, comes February when Focus Lumber announces its 4th Qtr 2015 results, I won't be surprised at all should there be a final dividend of at least 5 sen (making it a total 20 sen dividend for 2015). My years of experience can sometimes be very right with my hunches.

Should that happens, the dividend yield for Focus Lumber would be 6.8% base on its closing price at RM2.90 on Jan 8, 2016.

By then, do you think Focus Lumber would still be trading at below this price? You do your maths now, but I am not asking you to buy, similarly I am also not selling my 36,000 shares of Focus Lumber as well.