eyewitness

Excellent analysis, Thomas.

2017-02-26 22:36

popo92

When you take all figures and numbers out and you don't look at details, its gonna cost you a lot. The fact is financial analysis need details on company movement. Let's take an example High gearing is because of acquisition of F&B business and also kianjoo. Are these business deal worth it? I try not to be bias. Recent year, there's interest buyer of kianjoo from aspire insight (3.30) and Toyota Tsusho Corp (3.74) and canone rejected them. At the first place, borrowings to buy kianjoo can be solve easily. Secondly, how much kianjoo actually worth? Is kianjoo providing enough return for canone? EPF is giving a very high valuation to buy canone F&B business too. How do you rate this deal? Again, look at past financial analysis of 11 year doesn't make any business sense at all. We all know, F&B milk division weren't wholly owned back then, Kianjoo weren't purchase as well. Problems you should really finding out is are these deals worth, are they generating cash flow to canone now and in future? PE for past history are baseless, quality to generate future PE is what we are looking for..

2017-02-28 19:52

Michael Chen

Well, this is just a financial analysis on Can-One Bhd's core biz.. Besides, Can-One only owns Kianjoo 32.9% (Not even a subsidiary). Not to mention that Kianjoo's performance is not good as well. At the end of the day, it is still boils down to the Group's Cans division & Food division. The writer already analysed the "operating" cash flow generated by the Group which is generally not consistent. This automatically linked to both the Group's core biz cashflows.

Indeed, past performances does not determine future results but it is a good indicator of whether the Group's biz is resilient or not. The writers look at long-term. Unless you are pure asset play, then assets like Kianjoo maybe your focus.

2017-02-28 23:54

Thomas Chua

If you look at the figures correctly, you would have noticed that F&B Division starts on year 2006. Kianjoo's contribution to the company's earnings does provide a significant impact on the Group's net profit that's why I believe the Management does not want to sell-off KJ to Aspire & Toyota. But if you look carefully in its cashflow statements, it is excluded from net profit (merely an accounting gimmicks), which means there is no cash flow coming in to the company. To me, cash is king. KJ only provides Can-One dividends. If KJ future performance is not good, means dividend is reduced.

Perhaps I should write better next time to include more biz activities for better understanding rather than numbers...haha, thanks for your info popo92!! =)

2017-03-01 00:17

stockmanmy

The high capex 20111 to 2015 is to built up its milk division which today is very profitable and highest contributor to Canone.


Furthermore, the operating cash flow did not include Associate profits from Kian Joo , nor dividends from Kian Joo.



Bottom line, analysis failed.

2017-03-03 09:19

stockmanmy

on a strategic, how would one rank Canone management?


I would give them A +, it now controls Kian Joo which has a market cap of $ 1.3 billion.

many have tried but only Canone managed to take over Kian Joo.

You can analyse this KJ acquisition further.

2017-03-03 09:49

Thomas Chua

Hi, the high capex is since year 2006 till 2015. If a biz needs this long period and high capex to build, in my opinion, it is not a good biz even though it is growing. This is just my personal analysis and sharing. I analysed this company based on their core business.. Investment in associates is where they can sell anytime when they deemed fit.. As mentioned, if you read their cashflow statements.. you would have noticed that it is excluded from the profit before tax, pls refer "Share of profit of equity-accounted associate, net of tax"..

You prefer this company, maybe is because you probably know much more than I do.. Thanks for sharing your thoughts..

2017-03-03 23:35

Olga

to be honest.. there are advantages and disadvantages in canone.. but the bottomline is this: can canone face the uncertainty and do well, then it can easily clear its debt off and no more worries? or something happens along the way that canone finds it hard to be profitable, like price of raw material surged too much.. or nothing happens at all and revenue and earnings all stay stagnant n after any years the debt has been paid off..

part 2: even if u get it all figured out.. now can u figure out how the price of share of canone will move? maybe canone is gonna make a big profit next qoq, maybe.. but price did not move up.. or price moved up and everyone thinks the next qoq will surely be good and it turns out bad?

Conclusion: the writer did a good job on the points he has mentioned. Whatever points he did not mention if anyone would to point it out and share is also good.. but currently, in my own opinion, just mine, canone needs to show the kind of results that is above expectation from the capex they have put it. no doubt its business sector is good as demand is there but the demand growth is what we want, isn't it? and on the downside, the risk of it to fall is of course there as the margin of error is slim..

2017-04-09 14:32