Quick question - I assume your target price for 2017 & 2018 @ $2.52 and $3.09 respectively are the true and fair value of the business.(not share price)
From my understanding a company fair value tracks closely to its ROIC yoy if someone bought it at fair price. CAB has ROIC of 8-9% and lets give it 10%, and with no dividend, at most the true value would compound at 10%-11%, means from $2.52 to $2.77.
Your valuation indicate an intrinsic value growth of 22.6%, mind to explain if I miss out something? Unless you are talking about share price not the value of business, which I hope you're not, considering all the hardwork you put in to produce all these. Thanks.
The assumption of increase in revenue for FY2018 4th quarter is based on 30% increase in broiler production capacity following the acquisition of Farm's Best assets. It was supported with the claim by the management in the news. We'll see if they can deliver what they said.
Other than the projection for the possible contribution from newly acquired assets from FB remained to be seen/proven, in my personal opinion, all figures projection are reasonable & cautiously optimistic.
One thing I truly admire WW is that he uses figures to tell the story & not only just a general concept like many others do. It enable us to see things in figures based on information that made available publicly.
My advice is to take our own assumptions or factors to work out our own working based on the sample/sharing by WW & see what are the possible differences/variances. It may help us to make better decisions. It's just my humble opinion.
Thank you very much to Wealthwizard and Moneysifu. Appreciate your sharing and recommendation. I would like to express million thanks for your recommendation. I will share my top pick later by this weekend. Lets earn together
@ Ricky Yeo, Wealthwizard has lead us to the visibility of CAB earning and potential to be expanded... the rrest really up to individual to decide. .. Everyone individual has their own planning and different risk appetite. ..
I got to say, some good with valid finding article may stimulates the share price ahead... I find nothing fishy here... minima risk I can see, if bird flu come attack.
so all in all, the selling point is the additional capacity from farmbest.
just few question, since farmbest is 53% owned and 2018 would recognise four quarters from farmbest, shouldn't the non-controlling interest get more % out of the net profit? and what are the reasons why CAB will sometimes post quarterly losses? sorry too lazy to check myself so just tap you brain
to me, poultry stocks still doesn't deserve high PE since the industry produce generic products, has little moat and is a price-taker both in terms of products selling price and inputs costs. if assuming 25c is achiveable by 2018, 10 times PE Tp will be 2.50, 8 times will be 2.00. I have no idea how high/low it should be, so will leave it to those interested in CAB
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Kino Kow
268 posts
Posted by Kino Kow > 2017-04-06 00:19 | Report Abuse
Thanks WW