DELEUM–Fundamental Analysis (21 May 2014)

DELEUM Analysis:-

Excel – http://1drv.ms/1lPOArM

My View:-

– Valuation
  – 5Y DCF: 7.37 – 8.38 (MOS: 13% – 24%)
    – I believe that future competition will be intense and cost of doing business will rise, in particular staff related cost and higher inflationary pressures.
    – I think DELEUM’s FCF growth will slow down. Thus, I will take 7.37 as the fair value.
  – Absolute EY% – Buy under 2.62, sell above 5.43
    – Although this is slightly contradict with the outcome of DCF, it is actually logical. This is because DELEUM has been bullish since early of 2013.
    – I believe that the current price already factored in the growth drivers.
  – DELEUM is now nearly valued.
– The long term outlook looks bright for Deleum, with a RM3.5bn orderbook lasting up to 7 years and 2 major contracts commencing in FY14.
– I will wait for bigger correction. Let see how it goes.

Latest Financial – Q1 2014 Financial Report (21 May 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1628701

At the time of writing, I did not own shares of DELEUM.

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