best balance sheet and lowest P/E. If you exclude net cash and investments, even more undervalued. The only thing is management is more conservative... not really embarking on any expansion
pros n cons, if market crashes, LTKM coffers will be undermined. KSL n Malton are property com. and the trading volume is really low. only good for buy n hold.
I own stock of LTKM. A bit shock to learn that LTKM is holding so many property counters as investment. The boss is good in business but seems poor in stock market. Better just distribute the excess cash as dividend to us.
The main challenge for this segment comes from the volatility of the commodity-based price of the major raw materials; namely corn and soybean. The management recognizes the importance of cost management to minimize impact of such volatilities and maximize operational efficiency in every sector of its organization. Another major concern is the risk of an outbreak of the bird flu. 有没有知道怎么查找 corn 和soybean价钱?我忘记了。
Volume is a little bit higher than usual days, but not a lot. Someone holding big might be reducing his stakes, think no worries. Was surprise greddy sold some time back and i follow after that, but sold only half.
We initiate coverage on Teo Seng Capital Bhd (TSC) with a BUY and a fair value of RM2.40/share, based on a fully-diluted PE of 13x on FY15F earnings. TSC is a Shariah-compliant stock.
- TSC is a well-managed modern poultry farmer focusing primarily on the production of eggs. With a daily output of 3.1mil eggs, it is the third largest egg producer in Malaysia. About one-third of its production is exported to Singapore.
- Our investment thesis is built around five key factors:-
1) Favourable industry dynamics with stable growth of 3%- 5% p.a.: The industry is largely recession-proof as eggs are a consumer staple and is a small ticket item in household spending. The inelasticity of demand for eggs was demonstrated during 2008, when consumption increased by >6% YoY despite a price increase of 17%.
2) Strong management track record and parentage, backed by regional poultry giant Leong Hup (LH): TSC’s earnings CAGR of 35% over the last three years – FY12 to FY14 – is a testament to its management expertise.
As part of LH, TSC has first pick of the top layer breeds, which ensures the quality of its eggs. It also enjoys bulk discounts from scale economies on its raw materials as these are purchased by LH at the group level.
3) Scarcity of good consumer stocks trading at low PEs: Based on FY15F’s earnings of RM61mil, TSC is trading at an attractive PE of 11x, versus the average consumer sector’s PE of 18x. Its high ROE of 23% also stands out.
4) Robust earnings growth: We forecast earnings to expand by 16%-26% over FY15F-FY17F, underpinned by production capacity expansion (+400,000 eggs/day p.a. to 5.1mil eggs/day in five years) and steady demand growth. Operating margins are expected to remain intact at about 20%, thanks to soft commodity prices, namely corn and soya, which are feedstock for its layers. The addition of biogas plants would also help lower operating costs.
5) Expanding dividend payout: Capex of RM70mil would peak in this fiscal year, and thereafter normalise to RM25mil p.a. Given its steady average FCF of RM50mil over FY15F-FY17F and an under-geared balance sheet (net gearing: 24% but would revert to net cash in FY16F), management is targeting to raise its dividend payout from its historical rate of ~20% to 35% within the next three years. Based on its last traded share price of RM1.98, a payout of 35% would see yield rising to 5% in FY17F.
- TSC lacks an institutional following as it is presently under-researched. We believe that this would change given improved corporate access, steady earnings and dividend track record.
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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....
simon_nick
129 posts
Posted by simon_nick > 2014-10-31 19:26 | Report Abuse
Yay up_down, LTKM is near RM5 again :D