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Last updated: December 2018

Young Investors

Case Study June 2013 : Faber Group Berhad

Faber Group Berhad ("Faber" or "the Group") is listed on the Main Market of Bursa Malaysia Securities Berhad under the Trading/ Services Sector. From a Malaysian hospitality concern founded 49 years ago, Faber has, following a successful restructuring exercise and strategic initiatives, grown into a leading player in the Integrated Facilities Management ("IFM") and Property Development sectors.

Today, Faber is one of the nation's largest companies providing IFM for Hospital Support Services, ranging from Facilities Engineering Maintenance Services ("FEMS"), Biomedical Engineering Maintenance Services ("BEMS") and Cleansing Services ("CLS") to Linen and Laundry Services ("LLS") and Clinical Waste Management Services ("CWMS").

Faber also provides professionally managed IFM services, maximising asset lifespan, functionality and reliability, in other sectors, local and international.

Revenue and Profit

Faber’s has recorded a stable in its revenue and growth in its profits since FY2009.

Revenue and Profit
FYRevenue ('000)Revenue GrowthNet Profit ('000)Net Profit GrowthNet Profit Margin
2009 RM805,282 - RM106,108 - 13.18%
2010 RM888,846 10.38% RM103,332 -2.62% 11.63%
2011 RM908,839 2.25% RM71,385 -30.92% 7.85%
2012 RM886,280 -2.48% RM147,434 106.53% 16.64%
Editor Speaks

Comparing Revenue and Net Profit growth rates, Faber’s Net profits show different movement, where revenue increase, but net profits decrease. While at FY2012, revenue has decreased 2.48%, the net profit has increased 106.53%. That is contributed by the good control in cost and expenses.

Faber’s Net Profit Margin has maintained around 10% level. From the chart, we see it decreased since 2009, but increase significant in FY2012. This shows the company aware and putting more effort on controlling cost and expenses.

Current Ratio

Current Ratio
Year 2009 2010 2011 2012
Current Assets (RM'000) 700,522 833,940 773,070 828,160
Current Liabilities (RM'000) 250,823 306,064 560,625 330,360
Current Ratio 2.8 2.7 1.4 2.5
Editor Speaks

Faber’s has managed to keep its current assets above current liabilities with a healthy level. From FY2011 to FY2012, current ratio increased substantially due to significant decreased in current liabilities and increased in current asset. These reduce the fixed cost incurred in borrowing.

Editor Looks Further

Dividends

For those concerned about dividend payouts, Faber’s Dividends have increased over the years, from RM0.06 in FY2009, to RM0.08 in FY2010 & FY2011, and RM0.30 in FY2012.

PE Ratio

Faber’s PE Ratio has maintain a healthy level, from 7.07 in FY2009, 7.42 in FY2010, 9.71 in FY2011, to 5.39 in FY2012. A big drop in FY2012 shows that the price increased I a slower rate than the growth in company earning, and could be seen as a potential counter as investment.

Some Good News
  1. Faber’s subsidiary Faber Medi-Serve Sdn Bhd (FMS) has a 10 years tenure concession award by government for Hospital Support Services (HSS), and a further of RM16.57 Million for sustainable programme, with terms and condition negotiable between government and FMS. The HSS cover northern region of Peninsular Malaysia (service fees increase 5.8% compare to 2011), Sabah (service fees increase 7.8%) and Sarawak (service fees increase 8.1%).
  2. In Faber’s financial position, its interest bearing liabilities is just RM3.3 Million.
  3. Up to the latest quarter result released by Faber, Faber’s hold a net cash of RM312.5 million. Faber will use the cash to acquire more land in end of this year.
Some Bad News
  1. FMS hold only minority interest of 40% in HSS awarded in Sabah and Sarawak.
  2. Increase in minimum Wage Rate from 1st January 2013.
  3. From the Property Division, most of the project already completed. Thus, profit from the division to cover decrease in HSS is not optimistic.
  4. Integrated Facilities Management (IFS) non-concession recorded lower revenue due to termination of certain contracts.

Editor Delves Deeper

Cash Flow
Year 2011 2012
Net Cash Generated from Operating (RM'000) 90,458 260,112
Net Cash Generated from Investing (RM'000) -16,857 5,647
Net Cash Generated from Financing (RM'000) -35,673 -244,798
Cash and Cash Equivalents at End (RM'000) 322,373 340,357
Cash Flow

Faber’s has kept its record in generating positive cash flow from operating activities since FY2009. In FY2012, net cash generating from operating activities has increased substantially to (RM’000) 260,112, which due to the significant increase in Cash receipt from customer. Faber’s then use this cash to redeem back its RSLS (Redeemable Secured Loan Stock) and dividend payment. By reducing the interest component liabilities, the company is now having more flexibility in using its cash.

Editor Speaks

Although Faber facing challenges on most of the division, but with the Strong Net Cash on hand and relatively low debt component. Faber can utilize its cash with higher flexibility. Editor is optimistic on the growth of Faber and the dividend for the coming financial year end.

By the Young Investors Team