Can you comment on Fitters stock?
For the past one year, i read few Fitters stock analysis from rhb. Four things here. First issue is the business is quite complicated. Fire prevention and construction, green project, palm oil milling, property, renewable energy, fibre and pellet. After reading so much, i dont really understand. But my summary is this, it is a new venture and with uncertainty. But if successful the growth will be very good.
Second issue is, because i dont really understand the story, i look at the figures. As a lazy investor, i normally look at figures. No matter how beautiful the story, if the figures are not good, I am not interested. Analyst has done a great job in summarising all the story into figures. But for the past one year, i noticed that the forecast given by rhb always have big changes.
Third issue is, rhb has written few Fitters shares research report, but they always put unrated. I always curious why they want to write so many but still unrated.
Fourth issue is, if u get a Fitters stock analysis report, make sure the figures include the warrants shares. Meaning, Fitters earning per share should be showing a warrant diluted earning per share. This is to be more prudent. Rhb report did not include warrants.
Let me present it using some basic figures, forecast by rhb in oct 2011, i add in the warrant for calculation.
At Fitters share price of RM0.90.
Fitters PE ratio 10.9x (dec 2011)
Growth 57% (2012), 14% (2013). PE ratio estimated 6.6x (dec2013)
Gearing 0.3
Fitters Dividend yield 1.6%
From the above we can see that with that kind of growth, Fitters shares PE ratio is not expensive. However, the growth is quite uncertain especially the forecast have been changing many times.
For info, there is one broker, i think is Mercury Securities (cannot remember who), is recommending a buy onFitters stock.
If you trust rhb forecast and you think that Fitters green venture will be successful, then based on the figures i think Fitters can keep. Even without the future green profit, Fitters still trading at 10x only, as long as no major losses if the project fail.
Question is, whether you trust the forecast and confident in the green venture.
Disclaimer
No problem. Should be able to growth further. Should be able to touch 2.00 or more as the future of green energy would growth to reduce impact of carbon emission onto the earth atsmosphere and surrounding. To understand better you can go to their website www.fittersgroup.com for a details understanding of their nature of works under renewable energy.
ReplyDelete1. difficult business to understand . Not one an idiot can run
ReplyDelete2. unsteady revenue and eps
3. cash flow no good
4. green energy?? something new.see in 5 yrs.
meanwhile keep your money.