Favco is in the manufacturing and hiring of heavy duty cranes under the international brand names of Kroll and Favelle Favco.
It has manufacturing bases in Demark, USA, Australia and Malaysia while the operation in Singapore and UAE focus on sales and rentals of cranes.
Favco produces tower cranes for the building industries and 11 of the 13 tallest buildings in the world, including Burj Dubai in UAE, Taipei 101 in Taiwan and Petronas Twin Tower KL used its cranes.
The group currently has an outstanding order book at RM 1.091 billion. Which came from oil and gas, shipyard, construction and wind turbine industry. This is an all time high to the group.
Its account shows that it has more than RM 300 million advance payment for cranes.
Current price (4th January 2015) : RM 2.80
Target price by April : RM 4.00 (P/E assumed to be at 10).
3Q 2014 EPS : 28.70 (expected 40 cent)
FY 2013 EPS : 31.61 cent
FY 2012 EPS : 33.64 cent
Dividend given out :
FY 2014 : xx cent (TBD)
FY 2013 : 10 cent
FY 2012 : 8 cent
Its 3rd quarter ending Sept EPS was 10.86 cents and for the 3 quarters EPS of 28.70 cents.
I expect its full year EPS to be more than 40 cents.
In view of our cheap Ringgit and a large portion of Favco’s earnings is in foreign currencies,
Due to the slum in the oil price and our Ringgit, our stock market is depressed and the worst hit are shares in the O&G industries.
Fig 1 : Favelle Favco Share Price For The Past 1 Year.
Unfortunately some investors also classified Favco in the O&G industries. As a result, its share price is being depressed to RM 2.80.