CARLSBG Updates – 25 Apr 2017

CARLSBG analysis file – https://doc.co/vYKN41

I don’t expect significant growth in CARLSBG (and HEIM) business in foreseeable future. In my opinion, at 15, valuation of CARLSBG is fully valued where I believe its fair value range from 15.3 to 15.6. Its dividend yield is around 4.5%.

As of now, I won’t consider to accumulate CARLSBG, but to hold it for extremely high dividend yield as my average cost for CARLSBG is almost free.

Join my FB group: https://www.facebook.com/groups/285121298359919 for more collaboration.

 

Duration of Investing a Stock if use DCF valuation

I was asked by a reader: “If we do 10-year DCF for a stock, does this mean we have to look into 10 year in investing the stock?

My response: NOT REALLY.

  1. By trying to help the reader to look from different perspective, I extended his question:”To get the total value of a company by using DCF, besides the 10-year projection, we also have to calculate Terminal Value. Terminal Value is necessary because we believe the company will continue generating profits for a very long time (infinity). Does this mean we have to invest in that company forever?

    DCF Components.png

    Remember: We have to discount the projected cash flow (near future value) and terminal value (far future value) to present value, at our discount rate. In this context, the present value means the company value as of the date we do the analysis. In other way, we can say the present value is our intrinsic value.

    DCF doesn’t tell you the timeframe of your investment, or how long you should invest.

    Thus, in theory, back to basics,

    1. Asking price > Intrinsic Value – Don’t invest or sell
    2. Asking price < Intrinsic Value – Invest!
  2. Intrinsic value derived from DCF is usually less conservative if compare to Dividend Discounted Model and P/E. Sometimes, a stock may need longer timeframe to approach the intrinsic value. This is probably the reason you have to invest (and wait) for longer term.
  3. “How long you should invest in a stock” – This depends on your investment plan. DCF is just a small part of your investment plan. Well, investment plan is another huge topic.

Join my FB group: https://www.facebook.com/groups/285121298359919 for more collaboration.

 

HEIM Updates – 7 Apr 2017

HEIM Analysis File – FY16 Q6 – https://doc.co/wybkYA

In the foreseeable future, I think HEIM won’t have significant catalysts to boost up its growth. Having said that, HEIM will still be able to achieve steady performance even if alcoholic beverage industry is a highly regulated industry, and also faces contrabands issues. At 17.98, valuation of HEIM is not bad where I believe its fair value range from 17.9 to 20. Besides, if you buy HEIM now, dividend yield is less than 4% (excluding special dividends).

As of now, I won’t consider to accumulate HEIM, but to hold it for >6.5% dividend yield based on my average costs.

There is one slight issue in my analysis file, but the issue doesn’t impact valuation very much. In its Cash Flow Statement, you can easily spot one item called “Amortisation of prepaid contractual promotion expenses”. In the footnote (AR 2016, page 129, Note 7.2), HEIM stated:

Included in prepayments of the Group are prepaid contractual promotion expenses for promotional activities of RM43,531,000 (30.6.2015: RM49,015,000) of which RM20,125,000 (30.6.2015: RM26,218,000) are to be amortised over a period of more than 12 months. The prepaid contractual promotion expenses are made to the Group’s distribution channels to carry out promotional activities specified in the contract. The amount is amortised to profit or loss based on the volume purchased by outlets from the distributors or the time period as stipulated in the contract.

Unfortunately, HEIM didn’t disclose how they allocate “prepaid contractual promotion expenses for promotional activities“, and how they amortised the expenses based on the volume purchased. Thus, there is no way for me to make projection. Although the figures were quite large, it didn’t impact valuation significantly.

Join my FB group: https://www.facebook.com/groups/285121298359919 for more collaboration.

BURSA Updates – 29 Mar 2017

BURSA Analysis File – FY16 Q4 – https://doc.co/D5nX5N

In the foreseeable future, I think BURSA won’t have significant catalysts to boost up its growth. Having said that, BURSA will still be able to achieve steady performance. Also, BURSA dividend payout is more than 90%. At 9.88, valuation BURSA is not compelling where I believe its fair value range from 9.4 to 10.3. Besides, if you buy BURSA now, dividend yield is less than 4%.

I will continue to accumulate BURSA if there is any significant correction.

Join my FB group: https://www.facebook.com/groups/285121298359919 for more collaboration.

PADINI – Fundamental Analysis (16 Mar 2016)

I have updated analysis file of PADINI based on FY17Q2 results.

In this release, I have made some corrections and fine tuning to the modelling.

At 2.9, in my opinion, PADINI is still slightly undervalued where its fair value range from 3.1 to 3.5. I will continue to hold and accumulate PADINI whenever possible.

Join my FB group: https://www.facebook.com/groups/285121298359919 for more collaboration.

DLADY Analysis File – FY16 Q4

DLADY Analysis File – FY16 Q4 – https://doc.co/anF242

In my opinion, in long term, DLADY is still slightly undervalued where I believe its fair value range from RM60-65. I will continue to accumulate DLADY for my kids.

Join my FB group: https://www.facebook.com/groups/285121298359919 for more collaboration.

 

WELLCAL – FY16 Q4 (2 Feb 2017)

Before CNY, I have accumulated some units of WELLCAL. Here is my analysis file: https://doc.co/JhXzES.

I believe that with the recovery of US economy and rise of construction projects, demand for industrial rubber hoses will continue to see a gradual recovery. Meanwhile, the additional capacity from Plant 3 supports WELLCAL in further strengthening its position in the market with a wider range of industrial hose.

In terms of valuation, at the level RM2.0, I think WELLCAL valuation is quite attractive, even if in the bad scenario.

wellcal-fy16-q4-valuation