DLADY – Fundamental Analysis (27 May 2015)

DLADY Analysis:-

Excel – http://1drv.ms/1PMn2Xz

Notes – http://tinyurl.com/lby6myo

My View:-

  • Valuation:
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 1.716) – Fair value 40.7 (Fair Value Uncertainty: VERY HIGH)
        • R4Q (EPS: 1.622) – Fair value 38.47 (Fair Value Uncertainty: VERY HIGH)
      • Forward:
        • FY15 (EPS: 1.72) – Fair value 40.81 (Fair Value Uncertainty: VERY HIGH)
        • FY16 (EPS: 1.834) – Fair value 43.51 (Fair Value Uncertainty: VERY HIGH)
      • EPS applied to reach the current stock price (46.8): 1.973
  • I am positive with DLADY’s future:
    • Its solid fundamentals and strong branding position
    • Aggressive marketing and promotional activities
    • Robust demand of diary product in the long-term as Malaysia’s population is projected to reach 38 million people by 2040 from 30 million currently.
  • Short term concerns:
    • The sales volume to continue the downtrend in view of the tough and challenging operating environment with consumer spending being undermined by the high costs of living and GST cautiousness
      • FY15Q1
        • DLADY recorded a revenue of RM197 million in 1Q15 that dropped by 25% q-o-q and 14% y-oy
        • The lower PAT was tempered by higher marketing expenses to support the re-launch activities of Dutch Lady new milk.
    • Strong USD/MYR will reduce profit margin of DLADY because of import of raw materials from other countries.
      • PAT of RM34 million in 4Q14 grew by 17% q-o-q and 5% y-o-y, bringing 12M14’s PAT to RM110 million compared to RM138 million in 12M13 (-21% y-oy). The lower PAT was tempered by higher dairy based commodity prices and weakening of the Malaysian Ringgit.
  • DLADY valuation is less attractive. I will continue to hold this stock for my kids.

Latest Financial – Q1 2015 Financial Report (26 May 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/4750581

At the time of writing, my family member owned shares of DLADY.


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