White Horse - an long term opportunity?

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#1
In my earlier few posts, I discussed about the recovery in the Bursa Malaysia construction companies and property sector.

Logically, the recovery will benefit the building materials supplier. In this post, I looked at White Horse. This is one of the biggest ceramic tile manufacturer in SEA. It had been incurring losses for the past few years as shown below.

[Image: Whitehorse-performance-index.png]

You can see that the losses pre-date the pandemic years. This was because the Malaysian property and construction sectors were already facing soft markets long before Covid-19. The impact was that White Horse had been operating below its break-even levels leading to losses. 

[Image: Whitehorse-breakeven.png]


In such a situation, if a company cannot increase the sale volume or selling prices, what is left is cost cutting. This is what White Horse did. 

Today it has a much leaner operations than 5 years ago. As such, as its sales volume picks up following the recovery in the construction and property sectors, I would expect its performance to improve.

But you need a long-term view. This is not a stock for the punters. 

If you want to know more about the company and my investment thesis, go to Is White Horse one of the better Bursa Malaysia stocks?
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#2
White Horse Berhad is the leading tile manufacturer in Malaysia that is currently trading below its Graham Net Net. The Graham Net Net is a short hand for its liquidation value.

Is this a value trap? I don’t think so. Ceramic tile is not a sunset product. 

[Image: White-Horse.png]

White Horse Malaysian business has declined due to the soft property market. I expect the Group to return to profitability when the property market recovers. There is growing global demand and hence export potential. My estimate is that this will take another 2 to 3 years before we see any results.

The Group is financially strong and not burning cash giving it time to outlast the economic downturn.
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