NoTimeToTrade, you are not wrong, all your points are valid..

It’s just that I also subscribed to Buffets advice with his baseball analogy - “The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot.. “

I guess i have this value investing mindset. I don't want to overpay. The price crashed last time due to raw materials prices skyrocketed during pandemic and only start coming down last year, It affected DLMI as well. Another thing that make me nervous is Ffb almost half billion debt.

I like FFB I want to buy, but couldn’t find reasonable price for entry. When it crashed to almost RM1 last time the institutions were snapping them and pushing the price up.. I was hoping it goes sub RM1..

Buying FFB right now is like buying a company with annual profit of RM1 million growing 20%-30% a year at the price of RM60 million. Just to put it into perspective..

I like to support local but FFB valuations is higher than tech stocks like Facebook, Alphabet, Microsoft, etc..

FFB current P/E is 61.. why?

Last QR operating profit excluding accelerated depreciation and one off was RM 59m. If they can maintain that every QR, Annual Operating Profit will be around RM200m. Current market cap is around RM2B, that brings P/E of 10 roughly.

Price prediction RM130, if new factory operates at full capacity (2x old factory) and raw materials prices maintain at current. Might take few years though.

At the closing there’s 63,800 queue buy at 27.58 equivalent RM1.75 million..

RM31 million transacted today. Whose buying?

Used to be RM67. It could return to that price if they can achieve operating profit around RM50+m per QR, which they already did last QR if excluding accelerated depreciation and one off.

Made sense if they have that kind of info..

FFB growth is high YoY but valuation and debt are on the high side. If not for EPF and Aberdeen buying it will be sub RM1.

Fundamental and valuation are good. Future growth with high tech double capacity new factory is good. Plan to be regional manufacturing hub is good. But EPF still has 2.9m shares, are they going to keep selling?

From the QR, regarding accelerated depreciation.

“Pursuant to the Company’s announced investment in our future manufacturing activities, DLMI has identified assets in its Petaling Jaya factory that will not be transitioned to the new site.”

“In light of this, DLMI has implemented accelerated depreciation for the mentioned assets at the start of 2021 financial year, continuing into 2022, 2023 and 2024.”

Dlady actual P/E is hidden by accelerated depreciation cost (due to moving to new factory) and one off (BAPA agreement).

Current P/E is 23 with operating profit of RM27m (latest QR). But operating profit without accelerated depreciation and one off is RM59m (latest QR), that is more than double.

As for EPF, they been reducing (diversifying) stake in Dlady from around 10% to now around 5%. And have been buying, accumulating FFB to now around 10% stake in the company.

The question is, has EPF stop selling? If yes then there’s no more resistance to go up.

Probably 3x in 3 years..

Today around RM14m..

Someone buying few million RM every other day..

My theory EPF is diversifying to FFB, they have been accumulating to about 10% now.

FFB has high growth, but also high debt. Valuation is high P/E 59, but I guess they are banking on the high growth.

Dlady numbers and valuation are good. Growth is decent now, hopefully the new factory will contribute to more growth.

Growth is good but debt too high.
Debt RM444m, revenue (TTM) RM 756m.
P/E is 55, rich valuation probably anticipating high growth.

P/E 58, high.. but nice revenue growth.

P/E below 10 at the current price is achievable.

If accelerated depreciation goes away, and if they can maintain Quarterly Operating Profit around 50m.

Current Operating Profit excluding accelerated depreciation and one-offs is 59.1m.

Current P/E is 21 with accelerated depreciation and one-offs.

From the latest Quarterly Report,

“On a like for-like-basis Operating Profit excluding accelerated depreciation and one-offs is RM59.1 million, marking a 363.2% increase versus the same quarter in 2022. This increase is mainly driven by growth in revenue and the softening costs of dairy raw materials.”

Operating Profit is actually RM59.1m, if excluding accelerated depreciation due to the new factory and one off costs for BAPA agreement.

Probably anticipating better QRs ahead..

Buy if you can hold min 2-3 years. It’s a cyclical play. Bonus play new factory with double capacity but you need 2-3 year to see its full potential.

Dutch Lady gearing up for the future
By Sharen Kaur
November 6, 2023

"When we go live next year, we will be doubling our current capacity. We also have land on the side to double the capacity again in the future.

"So technically, we can manufacture four times more than our current capacity in Petaling Jaya. If you have a factory, you build it based on what you need today, and of course, you always need extra capacity for growth. If you are going to invest RM540 million over a journey of five years, you want to make sure you are building a factory for the next 10 to 20 years.

https://www.nst.com.my/amp/business/corporate/2023/11/975194/dutch-lady-gearing-future

Post-review, DLADY retains its OUTPERFORM rating with a slightly reduced target price of RM26.60 (from RM27.00 previously), while NESTLE's UNDERPERFORM rating remains, with a DCF-derived target price of RM115 held steady. Forecasts and ratings for F&N, PWROOT, AEON, MRDIY, PADINI, and QL remain unchanged.

Kenanga Research - 7 Nov 2023

Yes not many people know but they do inform it in the quarterly report. But that’s good for the investors that do their research. The more you learn the more you earn.

Also not many people know the new factory will be a regional manufacturing hub.

“The new manufacturing hub will house a distribution centre, enabling DLMI to operate an end-to-end production cycle. It will also have a research and development (R&D) centre to enable the dairy company to create and innovate products with export potential, she said.

Ramjeet said DLMI wants to build a regional manufacturing hub and together with parent company Royal FrieslandCampina NV, it is the company’s commitment to raise the nutrition intake among children while at the same time upskill the community.”

Net Income last quarter already improved 12.64% YoY.

They hedge raw materials dominated in USD and other foreign currencies on 6 monthly basis.

“DLMI’s hedging policy is similar to previous years where we are hedging approximately 6 months ahead. Approximately 70% of our purchases are denominated in foreign currencies with USD being the main currency.”

Dutch Lady: To double production at new manufacturing facility next year. Dutch Lady Milk Industries (DLMI) plans to double production next year after shifting to its new RM540m facility in Bandar Enstek, deploying eight production lanes. The facility sits on 12.9 hectares and production is scheduled to commence mid- 2024. (The Edge)

TA Research - 9th Oct 2023
Dutch Lady Milk Industries Bhd plans to double production next year after shifting to its new RM540mn facility in Bandar Enstek, deploying eight production lanes.

Cost cutting and reduce head counts are generally good news for investor. Most stocks go up when companies announced this kind of news.

For Dutch Lady they already announced around 100 jobs will be cut once they move to the new factory in Bandar Enstek.

4QCY23 Investment Strategy - KLCI year end target 1,520 by Kenanga Research

Market-Moving Policy Initiatives of Unity Government!

Top picks:
1️⃣ CIMB (1023)
2️⃣ CDB (6947)
3️⃣ AMBANK (1015)
4️⃣ GAMUDA (5398)
5️⃣ IJM (3336)
6️⃣ ABMB (2488)
7️⃣ KPJ (5878)
8️⃣ SUNCON (5263)
9️⃣ DLADY (3026)
🔟 MBMR (5983)

Our top picks for the sector are:
• DLADY (OP, TP: RM27.00) for: (i) its resilient top line driven by the steady demand for staple food products, even amid the global economic uncertainties, (ii) the prospective growth in its margins from FY23 onwards due to falling food commodity prices, and (iii) its well-established brand and the escalating recognition of the nutritional advantages of its dairy products.

Source: Kenanga Research - 27 Sept 2023

Personally I like FFB but Dlady is better mathematically..

New factory 2x production capability, upgradable to 4x.. possible for regional production hub.. if buy need to hold 1-3 year..

I like FFB but current valuation is still high P/E 46.

Kenanga: Consumer staples offer topline defensiveness as food commodity prices ease

KUALA LUMPUR (Sept 6): Consumer staples sectors, specifically food and beverage (F&B) players, may offer more defensive investment opportunities with potential margin improvement due to easing food commodity prices, said Kenanga Research.
Notwithstanding that, the research house anticipates a steady uptick in consumer spending post the conclusion of the recent six state elections and extending into the fourth quarter of the year, bolstered by the government's accelerated implementation of policy initiatives.
“Additionally, the traditional year-end festive and shopping season is likely to provide a boost to market sentiment. Our outlook is further supported by a stable job market and indications that inflation has reached its peak,” said Kenanga in a note on Wednesday.

The research house said it favours Dutch Lady Milk Industries Bhd (‘outperform’, target price [TP]: RM27) due to its resilient top line underpinned by steady demand for staple food items despite an uncertain global economic outlook, the upside potential of its margins given the softening food commodity prices, and its strong brand recognition and increasing awareness of the nutritional value of dairy products..
https://theedgemalaysia.com/node/681472

Raw materials price skyrocketed during pandemic causing margin to shrink. Recently, raw materials price started coming down, combined with previous cost efficiency efforts and increased in products pricing, the margin is improving.

Currently the stock trades at 16x FY24F PE, according to BIMB Research.

Here are some interesting data:
- Market Cap: 1.4b
- Revenue (2022): 1.33b, revenue almost matches market cap.
- Debt: Almost none, 14m (negligible )
- New factory: 540m (internal financing, no loan)
- Margin improving as raw materials price start coming down from pandemic high.

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.”
In the long run, market will weigh the company base on fundamentals and price it correctly…

Good volume, over RM20m..

https://www.theedgemarkets.com/article/cypark-concerns-arose-misunderstanding-business-model
“Many, due to a lack of understanding of IC12 requirements, have also questioned the validity of our intangible assets. The intangible assets reported are, in fact, for the recognition of our physical landed assets, the SMART WTE Plant, which by concession contract belongs to us legally. However, the accounting standard requires the physical assets funded and constructed by us to be treated as intangible assets.“

I’ll wait for 1-2 year, a lot of RE projects in progress.. More revenue streams coming..

I think yesterday short-sellers got trapped.. Morning, Buy queues very low then after a while sudden shoot ups..

Read the article from TheEdge. Both Chairman and CEO received margin calls due to share price sudden drop..
https://www.tnb.com.my/assets/newsclip/13062022a3.pdf

If all RE projects completed and generating revenue by next year, imagine the QR..

https://youtu.be/JK0YRwNUceU
Cypark WTE Commercial Operation Date (COD) Sept 22

Read the article in TheEdge, both Chairman and Ceo received margin calls..

https://www.tnb.com.my/assets/newsclip/13062022a3.pdf

@Azam, the article from the edge is very good, tell the stories in detail. In the article Ceo and chairman confirmed they got margin call and unable to rectify their positions.

This reminds of Prestariang..