Picking the winners

Author: Axelrod   |   Latest post: Thu, 14 Mar 2019, 10:18 AM


(Part 2) PWF: Low Profile Poultry Stock

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With higher chicken and egg prices, PWF will benefit from aggressive capacity expansion in 2018:

The development of new farms carried out by the subsidiaries of the Group following its capacity expansion plan include: i. Development of the second phase of layer farm in Pendang, Kedah. Capital expenditure incurred amounted to RM8.7 million; ii. Construction of chicken coops in broiler farms in Sungai Siput and Sungai Tinggi, Perak, with capital expenditure incurred amounted to RM5.9 million; and iii. New breeder farm in Sungai Batu, Kedah. Capital expenditure incurred amounted to RM2.1 million. These developments shall continue onto FY2018 and involve capital expenditure of approximately RM44 million.

The Group will continue its expansion plan in FY2018. Two main areas of expansion are:- i. Construction of new broiler, breeder and layer farms to increase production capacity to cater for increasing demand; and ii. Conversion of existing open house system into close house system to enhance productivity and bio-security. Venturing into higher margin downstream activities is one of the main strategies moving forward for the Group in widening its earning base and to capitalize on its competitive advantage in integrated operation.

Shareholders will benefit from the expansion in the form of higher dividends after the capex cycle:

The Company strives to give its shareholders reward that correlates to the performance of the Group. In FY2017, the Company paid out a total of RM6.6 million cash dividends besides a distribution of 5,862,712 treasury shares at the ratio of 1 share dividend for every 28 entitled ordinary shares held. This translates to a 40% dividend payout ratio.

The company will expand margins by going downstream into processed chicken which is certified Halal:

JTM Food Industry Sdn Bhd (JTM), a subsidiary of PWF Consolidated Bhd, is a poultry processing company certified Halal by the Department of Islamic Development Malaysia (JAKIM). Over the years, we have developed methods and processes to achieve high Halal standards and cleanliness of our products.

Target price based on RM0.10 EPS is at least RM1.20 or 12x PE.

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Labels: PWF

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Chart Stock Name Last Change Volume 
PWF 0.73 0.00 (0.00%)

  Fear Trend likes this.
Fear Trend Agree. PWF is indeed undervalue stock
19/02/2019 4:01 PM
ramada Their final quarter always the weakest, for this few years.
19/02/2019 4:23 PM



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