The receivables in 2Q07 (lastest qtr) amounted to 36.622 mil, increasing by 6.231 mil from 1Q07 and 4.976mil from 2Q06. Do you think that is a red flag? My opinion is that since the revenue in 2q07 has also increase significantly compared to 1q07 and 2q06, the increase in receivables in 2q07 should not be a big concern.

"For the first half of FY2006, profit before tax [PBT] margins increased to 13.7% from 8.4% in the first half of FY2005, which shows an improvement in operating efficiencies and economies of scale," says Ng
This is an admirable feat considering that the price of primary raw materials used by Hexza, which include methanol, urea and molasses, has doubled compared with last year, according to analysts. This is mostly brought on by high demand from China and steadily rising oil prices.

However, ensuring further operational efficiencies is not the only thing Hexza is doing to secure growth.
"Hexza has plans for expansion of all its core businesses — formaldehyde-based resins as well as ethanol [ethyl alcohol] — some of which are in an advanced stage of implementation. The financial impact of these expansions should be accretive in the next financial year," Foong says.
The company has already invested some RM9 million in capital expenditure to increase the capacity of its factories by early FY2006, as its Ipoh plants are already running at full capacity. With the expansion, Hexza expects output to increase by another 30% to 40%. Hexza also has factories in Port Klang and Sarawak.
While its plants in Ipoh deal with the manufacturing of ethanol, its plants in Port Klang and Sarawak are involved in the manufacture and sale of formaldehyde and formaldehyde-based adhesives and resins for timber-related industries.

Yet Hexza's public profile remains decidedly low key despite its good results and position as market leader. However, Foong says this does not mean that the company has not been active behind the scenes.
"Hexza's core businesses are in very competitive sectors. And we are planning and working towards gaining greater market share for these core areas. But as to how much more only time will tell," says Foong.

"Hexza's core businesses are in very competitive sectors.

Last edited on Tue Oct 24th, 2006 14:15 by homerun

Friday October 13, 2006

Hexza does well despite challenges

BY KEITH HIEW

PETALING JAYA: Malaysia's largest ethanol products manufacturer Hexza Corp Bhd has performed “commendably” despite rising materials costs and intense competition, and should be a target stock for investors, said research outfit SBB Securities. 
The research house said due to external uncertainties, the brokerage was inclined to focus on companies with good management and valuations rather than on specific sectors, and singled out Hexza as an example of such a stock.  
The company's earnings per share (EPS) of 6.1 sen for the first half ended July 31 alone was equivalent to 77% of the EPS for the year ended Jan 31.  
Turnover for the second quarter ended July 31 improved 23.9% to RM41.8mil due to expanded capacity in its chemical division and increasing demand for the company's adhesive resins. Net earnings increased 9% to RM4.8mil. 
SBB Securities said the company had performed well in spite of challenges like increasing costs and competition due to rising demand of raw materials such as methanol and molasses from China and high oil prices. Hexza's operating margins, it said, had improved to 11.5% for the year ended Jan 31 from 8.5% in 2005, attributed to higher sales and rising economies of scale. 
The research house's senior analyst Ng Jun Sheng told StarBiz yesterday that SBB recommended Hexza in October 2004 when the stock was at 54 sen, but the share has not been active and its price has traded in the range of 42 sen to 64 sen in the past two years. 
Ng said: “We believe the underperformance of the stock could be due to the lack of media coverage and promotion by the investment community, the eagerness of the company's management to keep a low profile, a lack of investor focus on small-cap companies and maybe a high free float among shareholders.'' 
He added that SBB believes the company is “ripe” for a re-rating given the resurgence of interest in small-cap stocks, savvy management, undemanding valuations and anticipation of earnings improvement for the year ending Jan 31, 2007 due to lower raw material costs, efficiency gains and lower effective tax rates due to reinvestment allowance. 
SBB Securities expects a higher dividend of 3 sen for the financial year ending Jan 31, 2007 from Hexza on the back of higher earnings and stronger net cash of RM25mil. 
Another analyst, meanwhile, said Hexza's existing shareholders were also keen to increase their stakes in the company over the past two years as they themselves also recognise the company's value. 
Hexza shares closed 6 sen higher, or 11.5%, to 58.5 sen yesterday.

Last edited on Tue Oct 24th, 2006 14:53 by homerun

called other investment replaced the item called available-for-sale financial assets, and the value was Rm16.739 mil. If not mistaken, the marketable securities mentioned by the write-up on nanyang shud be included in these items which they put it either as available-for-sale financial assets or other investment. Still, I am not very sure.

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Last edited on Thu Oct 26th, 2006 02:48 by homerun

Last edited on Wed Mar 28th, 2007 09:49 by homerun