SOURCE

One of Mr Tong's recent selection.  

BACKGROUND

1.  About 80% plus percentage is contributed by assembly and distribution of Yamaha motorcyles in Malaysia and Vietnam.

2. Yamaha sales return to growh in 2017 in Malaysia and Vietnam (Associates) is expected to bring in higher growth. (For those who been to Hanoi will understand, motorcycles make sense (roads are narrow, and lack of parking spaces for cars).

3. The remaining business is manufacture & trading of tiles and industrial fibreboard.

4. Once we ignore the impairment loss of RM171m for its associates, the figures looks very undervalued.

BRIEF FINANCIAL BACKGROUND

1. Net cash of RM512m or RM1.56 per share.

2. Market cap at RM9.70 is RM3.2b.

3. Coming FYE estimated PAT RM330m (free cash flow is RM380m), giving it a PE of 9.7x ( or 8x using net cash market cap).

4. ROE is about 20%.

5. DY + EY = 15.6%.

6. Coming FYE sales over market cap close to 1x.

7. If we look at the changes of PAT over the changes of SF over the last 10 years, it will blow your mind.

HOW MUCH YOU MAKE IF YOU HOLD IT 10 YEARS AGO?

1.  CAGR of 12-13% vs Litrak or PLUS highway of about 10%.

2.  What about Next 10 years? The pricing today is low because of the RM171m scare.  Once we see the FYE 18 (30 June), it will be a growth of PAT of 20% (excluding the RM171m impairment).

3.  Again, this is a long term stock (in my books), at least 3-5 years or hold forever, depends on the company strategy going forward.

4.  It is in the consumer product sector.  However, due to lack of coverage by analysts, it is trading at PE of 9x, and I can safely said, most consumer products that is "branded", trades at PE of 20-30x.

5.  What the heck, for long term, its DY is about 5%.

DO YOUR HOMEWORK PLEASE

1.  This is a very, very brief research. 

2.  Valuation does not determine when the share price will fly.

3.  Is just a reference of risk and reward.