JASKITA(8648.KL): Fundamental Write Up

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JASAKITA PROFILE

Jasa Kita Berhad is a Malaysia-based investment holding company. Through its subsidiaries, the Company is engaged in the manufacture, assembly and trading of electric motors, power tools, engineering and other industrial equipments, and the provision of management services and logistics-related services. The Company operates in three segments: manufacturing and trading, which include manufacture, assembly and trading of electric motors, power tools, engineering and other industrial equipments; logistics-related services, and investment holding. The Company's subsidiaries are Jasa Kita Trading Sdn. Bhd., Jasa Kita Engineering Sdn. Bhd., JKB Management Sdn. Bhd., Purton Engineering (M) Sdn. Bhd. and Jasa Kita Warehousing Service Sdn. Bhd.

  

SUMMARY

JASA KITA net income over the last 5 years had been inconsistent ranged from MYR7.4m in FY2010 to the lowest MYR3.1m in FY2014. In FY2014, JASKITA earnings took a beating dropped by 40% on the back of lower revenue generated from sales of goods and other income declined by more than 53%

Despite erratic earnings, JASAKITA has its positive aspect that attract my attention and hence my participation of investing in JASAKITA.

So what’s the positive aspect of JASAKITA? Here are the positive side:-

1.  JASAKITA FY2015 Q1 and Q2 had recorded improved revenue and net income 
2.   JASAKITA had diversified into logistic related services and its revenue in both primary income stream had improved by 6% in sales of goods and its income from logistic operations register 15% gain.

•  Barring any unforeseen circumstances JASAKITA is unlikely to incur substantial roadshow expenses in the current FY2015 which had cannibalized its net profit to below USD300K region IN Q3 and Q4 of FY2014.
• Basis YTD Q2 FY2015’s result, it is highly likely that JASKITA revenue will continue to improve as well as 2013 or earlier
• JASKITA funds its assets with over MYR102m working capital.
• JASKITA another positive aspect is their retained income made up of nearly 50% of the entire shareholders’ funds, implied the company had been profitable for a number of years.

INCOME STATEMENT ANALYSIS

•     In FY2014, JASKITA revenue had declined by 6% while its net profit, dropped by 40% from preceding financial year (FY2013).
•         The sharp decline in net profit by 40% was due to 2 factor. 
•     Other income had declined by MYR1.6m (53%)
•     Other expenses jumped by MYR800K (37%)

• Further analysis revealed that JASKITA Q3 and Q4 result in FY2014 was hampered lower revenue and incurring higher administrative and other expenses, resulted net profit dropped to mere MYR270K – MYR280K in both quarters. (On average JASKITA make MYR1.5m each quarter.   
• The increase in administrative and other expenses was due to organizing many road shows at their distributors’ sales outlet and offering various incentives for its products. 
• Reviewing JASKITA FY2015 Q1 and Q2 recorded at MYR16.1m and MYR18.4m while its net profit posted MYR1.2m and MYR1.9m.
•  It is encouraging to see that its quarter revenue and net profit had recovered and continue to grow steadily.
•  Barring any unforeseen circumstance JASKITA may be able to match 2012 performance and doubled 2013’s result

·       JASAKITA projected net income in FY2015 will be at MYR6.3m, the projected EPS for FY2015 full year = 1.41sen. Using 12^th Nov 2014 closing @ RM0.20 sen the P/E will be at 14.2x.

BALANCE SHEET

ASSET STUCTURE ANALYSIS

•    In Q2 2015, compared to 31^st Mar 2014, balance sheet grew modestly by 3% to MYR102.1m from MYR99m.
•       Majority of the assets are

o   Trade receivables MYR22m (increase by 35%)

o   Total cash MYR37.9m (declined by 3%)

o   PPE at MYR15.5m (declined by 1%)

•     With exception trade receivables had increased by MYR5.7m not much movement in JASKITA’s assets composition.

LIABILITIES STRUCTURE ANALYSIS

•     JASKITA do not have non-current liabilities, its current liabilities amounts to MYR9.2m of which mainly made up of trade payables.
•       The company is mostly funded by its shareholders funds of MYR92.9m.

TECHNICAL ANALYSIS CLICK HERE

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By KH WONG

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