Century Bond Berhad is a market leader in cement packaging in Malaysia. Besides commanding a 60% market shares of Malaysia market, it has presence in Thailand, Indonesia and Singapore. It has a monthly capacity of 12 million cement bags and the current capacity utilization rate is 80% - 90%.

Century Bond revenue can be categorised into three major segment, which are manufacturing of paper packaging (mainly cement bag), manufacturing of plastic packaging and contract manufacturing. Paper packaging is the main revenue source which made up 83% of the company’s revenue.

On 11 August 2016, Kumpulan Perangsang Selangor (KPS) has entered into a conditional share sale agreement with Century Bond, acquiring 71% of Century Bond’s total circulated shares. Subsequently, KPS has proceed with a mandatory offer for the remaining shares at RM1.75 per share. KPS has no intention of maintaining Century Bond listing status once the deal is succeed.

For the past four years, we has seen a slight decline in both the top line and bottom line, while the core profit margin slipped from 12.5 % to 9.5%. However, the company holds no debt and has a cash of RM 0.61 per share, which is an attractive point for any investors who prefer strong balance sheet company in this time of turbulence.

The shares are tightly held by its family members who recently sold off their stake to KPS. The remaining shareholders includes Yeoman 3-rights fund who is famous in picking small cap high flyer stock.

Strength:

• Strong cash flow

• Insignificant debt

• Generous dividend where dividend pay-out ratio hovers among 30% - 50%

• Market leader in Malaysia cement packaging

Risk:

• Reaching full utilization rate of capacity, might requires more capital expenditure to further grow its revenue

• Overcapacity in Malaysia cement industry

• Slower property market leading to a slowdown in cement industry

• Cash is not being optimized by management as there has been sign of excess cash for many years

http://www.donkeystock.biz/

https://www.facebook.com/donkeystock/