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..

Market cap only RM200m now, maybe someone can take it private, a 400MW RE company..

@yong1985cm, you are right the article didn’t mentioned the margin calls came from directors. I assumed since the ceo and chairman were selling pledged shares. Assumption is speculation so i shouldn’t said that.

Fair article from theedge.. project delays during pkp, require them to adjust the sukuk schedule, market spooked, short sellers took advantage, directors got margin called.. just unfortunate..

Cypark RE Assets..
https://youtu.be/jiYMaolbibQ

Excerpt from latest quarterly report.

“At present, Cypark operates, owns, and/or manages approximately 96 MWp of RE assets. By FYE 2022, with the targeted completion of 172 MWp LSS3 project in Terengganu, 147 MWp LSS2 project in Kedah and Kelantan and the 20 MW SMART WTE Plant in Negeri Sembilan in 2022 together with other RE assets under our stable, Cypark will increase its operation of RE asset capacity to about 400 MW, strengthening Cypark’s position as the RE market leader in Malaysia. Subsequent to FYE 2021, the 49 MW LSS2 project in Sik, Kedah had successfully achieved COD on 1 January 2022. With the impending completion of the LSS2 and LSS3 projects, RE will remain as the major contributor to Cypark’s revenue and profit in year 2022.”

CEO buying back..

If they commission the two large-scale solar programme (LSS2) 30MW each, and waste-to-energy (WTE) project, more revenue will be generated..

Price is well supported, someone collecting

Klse2022. I can only speculate why he disposed his share. If you look at the Bursa Announcement, he and the Chairman disposed Pledged Security. Pledged Security means the share was used as collateral. It could be a margin call where top up was required but no one knows for sure. We can only speculate / guess here.

If you want to know more about Pledged Security case study on what happened to Genting HK, you use the link below.

https://www.mswg.org.my/sites/default/files/4%20September%202020%20MSWG%20%20Newsletter%20%28final%29.pdf

https://www.thestar.com.my/business/business-news/2022/05/28/cypark-shares-beaten-down#close

Yesterday, Cypark announced that RAM Rating has reaffirmed the long-term rating of AA3 for Cypark REF’s RM550mil socially responsible investing sukuk murabahah programme 2019/2041. It said the assessment has also considered the “extraordinary resolution notice” that was circulated to the sukuk holders on May 23, 2022.

“These changes, including modifications to the transaction terms and payment structure, are not averse to the issue rating. “The AA3 rating indicates high safety for payment of financial obligations. The rating outlook is maintained at ‘negative’ to reflect RAM Rating’s concerns of extended construction delays for the two floating solar plants at Danau Tok Uban beyond its stressed timeline,” Cypark points out.

Daud says Cypark expects the two floating solar projects under the large-scale solar programme two (LSS2) with 30MW capacity each, as well as its waste-to-energy (WTE) project, to start in September this year.
“The floating solar project has reached the final stage of construction, of which the floating solar system installation and interconnection works are already completed.
“The construction of Tenaga Nasional Bhd’s (TNB) infrastructure facilities is ongoing but facing some delays due to slower approval process by TNB which involves additional requirements,” he says.

On the group’s borrowings, Daud points out that 85% are long-term loans and sukuk, which are mainly for project financing for its current contracts. “The loans will be pared down by the recurring cash flow streams to be received from TNB for the sale of electricity produced by RE and tipping fees from the government.

“The project inflows are more than sufficient to repay the debts,” he says. Last year, Cypark completed a private placement of up to 20% of its total issued shares to raise up to RM108mil. Following the success of the fund raising, Daud expects the group will not require any further funding for its ongoing projects.
“Any future needs to raise funds will likely happen if Cypark secures a sizeable new concession project,” he adds.

Cash in the bank based on latest quarterly report is around 240m. Payment default is unlikely.

Chairman, Tan Sri age 83 was substantial shareholder, ex Suhakam Chairman, ex UN Assembly President, was also UN Security Council Chairman. I will assume he is very ethical guy. Not sure what gone wrong. It’s anyone’s guess at the moment..

EPF is still hold 30+m share. Price drop 65% from 1 year high, was it margin call? Price kinda stabilised today. Company should make statement..

Institutions, investors, etc use it to evaluate Sukuk / Bond.
Around half of Cypark debt (550m) is in SRI Sukuk Murabahah which receives AA3 rating.

RAM Rating is used by institutions

AirAsia tambah penerbangan 319 seminggu ke Sarawak mulai 14 Februari

https://www.astroawani.com/berita-bisnes/airasia-tambah-penerbangan-319-seminggu-ke-sarawak-mulai-14-februari-345650?amp=1

KUALA LUMPUR (Jan 24): SK Group, South Korea's second largest conglomerate with a market capitalisation of US$177 billion, is looking to expand its reach in the ASEAN financial technology (fintech) space with its investment in BigPay, a Malaysia-based ASEAN fintech company.

https://www.theedgemarkets.com/article/sk-group-plans-expand-asean-fintech-reach-bigpay-investment

AirAsia changes name to Capital A as it grows beyond an airline

https://www.channelnewsasia.com/business/airasia-changes-name-capital-it-grows-beyond-airline-2465471

AirAsia Group records highest quarterly consolidated load factor since pandemic began

https://www.theedgemarkets.com/article/airasia-groups-combined-malaysia-indonesia-philippines-operations-recorded-highest-quarterly