Bursa Malaysia Stock Watch
CI Holdings
kltrader
Publish date: Sat, 10 Jul 2010, 12:23 PM
kltrader
0 20,639
This blog provides consolidated Bursa Malaysia stock market research, analysis, news and blogs from various sources. You can search and find all the past analysis and coverage on stocks and news by searching within this site. While this blog re-publishes contents from other sites, it does not own the rights nor responsible for the accuracy of the contents. If you disagree to your content from being published here, please add a comment, and your article will be removed from this site.
RECOM Buy
PRICE RM2.31
? Maintain BUY. Our Small to Mid Cap Conference presented an opportunity for some fund managers to meet the management of CI Holdings (CIH) for the first time. In light of the contract breakdown between F&N (FNH MK, Underperform) and The Coca-Cola Company (TCCM), management talked about its agreements with PepsiCo during the Q&A session. It is confident that its relationship with PepsiCo will be intact as the two parties have a complementary relationship given that CIH?s products are not in PepsiCo?s line-up. We maintain our earnings forecasts and target price of RM3.28, pegged to an unchanged 20% discount to our 15x target market P/E to account for the stock?s relatively low liquidity. CIH remains firmly a BUY, with the potential re-rating catalysts being 1) capacity expansion, and 2) an increasingly marketable product line.
? Complementary relationship with PepsiCo. The relationship between CIH and PepsiCo started in 1973. The agreements between the two companies are renewed every five years and the current agreements will be up for renewal at end-CY11. Unlike F&N and TCCM whose soft drinks and fruit juices overlap, CIH and PepsiCo have a complementary relationship. CIH?s in-house products such as Chill (Asian drinks) are not available in PepsiCo?s product line-up. Management is, therefore, confident that its relationship with PepsiCo will be intact.
? Extra capacity for non-carbonated drinks. From 20% two years ago, noncarbonated drinks, led by Tropicana, now account for 40% of group sales, with the remaining 60% represented by carbonated drinks. The revenue split between noncarbonated drinks and carbonated drinks is expected to hit 50:50 in two years? time given the additional capacity at the Bangi facility. The RM45m new lines are expected to be operational by Sep, just in time for Hari Raya.
Yesterday, we hosted a Small to Mid Cap Conference which presented some fund managers an opportunity to meet the management of CIH for the first time. The company was represented by Syed Khalil Syed Ibrahim, VP of corporate finance and planning and Erwin Selvarajah, CEO of Permanis. In light of the contract breakdown between F&N and TCCM, management talked about its agreements with PepsiCo during the Q&A session.
The relationship between CIH and PepsiCo started in 1973. The agreements between the two companies are renewed every five years and the current agreements will be up for renewal at end-CY11. Unlike F&N and TCCM whose soft drinks and fruit juices overlap, CIH and PepsiCo have a complementary relationship. CIH?s in-house products such as Chill (Asian drinks) are not available in PepsiCo?s product line-up. Management is, therefore, confident that its relationship with PepsiCo will be intact. Meanwhile, on 3 Jun, CIH announced its proposed purchase of land and warehouse in Bangi industrial estate for RM29.5m, which will be funded by internal funds and bank borrowing. The acquisition is necessary because the current warehouse measuring 200,000 sq ft is already bursting at the seams given the company?s swift growth in recent years.
CIH?s 3QFY6/10 was the fourth straight quarter of results outperformance. FY10 is set to be a record year for the company. We forecast a net profit of RM35m (+67% yoy), with much of the earnings growth coming from Tropicana fruit juices and Lipton Tea variants. We are looking at an FY10 DPS of 10 sen, which gives a decent yield of 4.3%.
Maintain BUY. We maintain our earnings forecasts and target price of RM3.28, pegged to an unchanged 20% discount to our 15x target market P/E to account for the stock?s relatively low liquidity. CIH remains firmly a BUY, with the potential re-rating catalysts being 1) capacity expansion, and 2) an increasingly marketable product line.
52-weeks Share Price Range (RM) RM1.04/RM2.54
Major Shareholders: %
Datuk Johari Abdul Ghani 28.2
Continental Theme Sdn Bhd 11.1
PNB 5.7
By CIMB
Analyst: Norziana Mohd Inon
PRICE RM2.31
? Maintain BUY. Our Small to Mid Cap Conference presented an opportunity for some fund managers to meet the management of CI Holdings (CIH) for the first time. In light of the contract breakdown between F&N (FNH MK, Underperform) and The Coca-Cola Company (TCCM), management talked about its agreements with PepsiCo during the Q&A session. It is confident that its relationship with PepsiCo will be intact as the two parties have a complementary relationship given that CIH?s products are not in PepsiCo?s line-up. We maintain our earnings forecasts and target price of RM3.28, pegged to an unchanged 20% discount to our 15x target market P/E to account for the stock?s relatively low liquidity. CIH remains firmly a BUY, with the potential re-rating catalysts being 1) capacity expansion, and 2) an increasingly marketable product line.
? Complementary relationship with PepsiCo. The relationship between CIH and PepsiCo started in 1973. The agreements between the two companies are renewed every five years and the current agreements will be up for renewal at end-CY11. Unlike F&N and TCCM whose soft drinks and fruit juices overlap, CIH and PepsiCo have a complementary relationship. CIH?s in-house products such as Chill (Asian drinks) are not available in PepsiCo?s product line-up. Management is, therefore, confident that its relationship with PepsiCo will be intact.
? Extra capacity for non-carbonated drinks. From 20% two years ago, noncarbonated drinks, led by Tropicana, now account for 40% of group sales, with the remaining 60% represented by carbonated drinks. The revenue split between noncarbonated drinks and carbonated drinks is expected to hit 50:50 in two years? time given the additional capacity at the Bangi facility. The RM45m new lines are expected to be operational by Sep, just in time for Hari Raya.
Yesterday, we hosted a Small to Mid Cap Conference which presented some fund managers an opportunity to meet the management of CIH for the first time. The company was represented by Syed Khalil Syed Ibrahim, VP of corporate finance and planning and Erwin Selvarajah, CEO of Permanis. In light of the contract breakdown between F&N and TCCM, management talked about its agreements with PepsiCo during the Q&A session.
The relationship between CIH and PepsiCo started in 1973. The agreements between the two companies are renewed every five years and the current agreements will be up for renewal at end-CY11. Unlike F&N and TCCM whose soft drinks and fruit juices overlap, CIH and PepsiCo have a complementary relationship. CIH?s in-house products such as Chill (Asian drinks) are not available in PepsiCo?s product line-up. Management is, therefore, confident that its relationship with PepsiCo will be intact. Meanwhile, on 3 Jun, CIH announced its proposed purchase of land and warehouse in Bangi industrial estate for RM29.5m, which will be funded by internal funds and bank borrowing. The acquisition is necessary because the current warehouse measuring 200,000 sq ft is already bursting at the seams given the company?s swift growth in recent years.
CIH?s 3QFY6/10 was the fourth straight quarter of results outperformance. FY10 is set to be a record year for the company. We forecast a net profit of RM35m (+67% yoy), with much of the earnings growth coming from Tropicana fruit juices and Lipton Tea variants. We are looking at an FY10 DPS of 10 sen, which gives a decent yield of 4.3%.
Maintain BUY. We maintain our earnings forecasts and target price of RM3.28, pegged to an unchanged 20% discount to our 15x target market P/E to account for the stock?s relatively low liquidity. CIH remains firmly a BUY, with the potential re-rating catalysts being 1) capacity expansion, and 2) an increasingly marketable product line.
52-weeks Share Price Range (RM) RM1.04/RM2.54
Major Shareholders: %
Datuk Johari Abdul Ghani 28.2
Continental Theme Sdn Bhd 11.1
PNB 5.7
By CIMB
Analyst: Norziana Mohd Inon
More articles on Bursa Malaysia Stock Watch
Tambun Indah - The 2nd Penang Bridge To Narrow Property Price Gap
Created by kltrader | Oct 11, 2012
Plantation ' Share Prices Not Reflecting CPO Price Movement ' Is A Correction Coming? (Neutral)
Created by kltrader | Oct 11, 2012
Discussions
Be the first to like this. Showing 0 of 0 comments
Post a Comment
Featured Posts
Latest Videos
Apps
Top Articles
1
save malaysia!
Visa-free travel to China extended for Malaysians to 30 days
2
3
Koon Yew Yin's Blog
CPO price is rising rapidly as shown by chart below - Koon Yew Yin
4
Axcapital's investment blog
KAB - Executing its way to a record quarter. Could more Petronas contracts be coming?
6
7
8
BFM Podcast
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
MQ Trading Signals
Stock
Time
Signal
Duration
No trading signals available.
Stock
Time
Signal
Duration
No trading signals available.
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
