B Brother watches stocks | Fundamental Analysis of Lotus KFM (8303).

Lotus KFM Berhad (referred to as LOTUS) is a listed company in Malaysia mainly engaged in flour production and related product trading, with its stocks traded on the Main Board of Bursa Malaysia.

The company's main sources of income are divided into two parts: one isThe production of Chicago SRW Wheat flourTwo isand the trading business of starch.As a quality-oriented company, LOTUS has always focused on stable and high-quality flour production as its core, aiming to win customer satisfaction and loyalty, while providing additional value to customers through quality service.

In recent years, LOTUS has proposed a diversified business strategy to reduce dependence on a single business and enhance overall profitability.The group has decided to enter the forestry planting industry in Malaysia to explore new recurring income sources.The addition of forestry planting business not only optimizes the company's revenue structure, but also effectively reduces the single market risk brought by the traditional flour production business.

To achieve this goal, LOTUS acquired three wholly-owned subsidiaries on October 11, 2021, namely ASV Jaya Resources Limited, Sam Jaya Plantation Limited, and Hijau Ria Solution Limited, with a total investment of 5.152 million Malaysian Ringgit.

On December 31 of the same year, the group further acquired two wholly-owned subsidiaries - Ladang Lojing Limited and Khas Jadi Limited, with a total price of 21.646 million Malaysian Ringgit. These acquisitions mark a solid step towards diversified operations for LOTUS.

According to the audited financial report for the fiscal year ending 2023, LKFM's financial performance shows a stable trend. Despite a decrease in revenue in 2023 (58.508 million Malaysian Ringgit) compared to 2022, the company still achieved profit growth.The after-tax profit reached 2.662 million Malaysian Ringgit.。

In addition, the company's shareholder equity increased from 76.052 million Malaysian Ringgit in 2022 to 79.096 million Malaysian Ringgit in 2023, demonstrating further strengthening of the company's financial foundation.

It is noteworthy that the company's performance in Asset Management is also impressive. In 2023, the total net tangible assets reached 79.096 million Malaysian Ringgit, indicating the company's financial stability and asset quality are at healthy levels. Additionally, the net asset value per share rose from 7.46 cents in 2022 to 7.73 cents in 2023, reflecting a gradual increase in shareholder value.

From a global strategy perspective, the flour production and trading business of LOTUS will remain its core source of revenue. However, with the comprehensive advancement of the planting industry, the group's income structure will become more diversified, helping to diversify business risks and enhance profitability. The management is confident about the future, believing that the existing flour business and the newly added planting industry revenue will jointly drive the continuous growth of the company's performance.

Furthermore, LOTUS actively integrates resources from its subsidiaries to enhance operational efficiency and market competitiveness through synergy effects. It is believed that in the coming years, the group will maintain steady development in traditional business while achieving new revenue growth opportunities.