DUTCH LADY MILK INDUSTRIES BHD

KLSE (MYR): DLADY (3026)

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Last Price

23.98

Today's Change

0.00 (0.00%)

Day's Change

23.98 - 23.98

Trading Volume

600

Overview

Market Cap

1,535 Million

NOSH

64 Million

Avg Volume (4 weeks)

39,283

4 Weeks Range

23.62 - 24.10

4 Weeks Price Volatility (%)

75.00%

52 Weeks Range

20.22 - 29.12

52 Weeks Price Volatility (%)

42.25%

Previous Close

23.98

Open

23.98

Bid

23.96 x 300

Ask

24.00 x 25,900

Day's Range

23.98 - 23.98

Trading Volume

600

Financial Highlight

Latest Quarter | Ann. Date

31-Dec-2023 [#4] | 20-Feb-2024

Next QR | Est. Ann. Date

31-Mar-2024 | 25-May-2024

T4Q P/E | EY

21.20 | 4.72%

T4Q DY | Payout %

0.00% | 0.00%

T4Q NAPS | P/NAPS

6.83 | 3.51

T4Q NP Margin | ROE

5.02% | 16.56%

Company Profile

Sector: CONSUMER PRODUCTS & SERVICES

Sector: CONSUMER PRODUCTS & SERVICES

Subsector: FOOD& BEVERAGES

Subsector: FOOD& BEVERAGES

Description:

Dutch Lady Milk Industries is a Malaysia-based company that produces and distributes dairy products. The company?s products include infant formula milk, growing-up milk, ultra-high-temperature processing milk, pasteurised milk, sterilised milk, family powdered milk, low-fat and zero-fat drinking yoghurt, and fruit juice drink. The products are packaged and marketed in various formats under the brand Dutch Lady. The company primarily operates domestically, but it distributes some of its products to surrounding countries in Asia and Oceania. Dutch Lady Milk Industries is owned by Royal FrieslandCampina.

Discussions
10 people like this. Showing 50 of 1,394 comments

CharlieM

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.

2023-09-03 08:11

alibiii

epf always buy high sell low

2023-09-05 16:58

CharlieM

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

2023-09-06 13:34

Up_down

Material purchased is getting cheaper from the quarterly related party transactions and gross profit margin on the way back normal level. This is another turnaround play.

2023-09-22 19:40

CharlieM

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

2023-09-22 21:43

Up_down

Aji had made a strong comeback with returning of better gross margin. Dlady could be the next.

2023-09-23 19:26

Kevin Tam

It looks like many come here to talk craps than giving meaningful comments. Integrity intelligent 's view is more rational than Calvintan . Dutchlady has lower quarterly profit in last 2-3 quarters but when the new plant start to operate, should be able to deliver better profit level n at the same time, I feel farmfresh is not a good choice for those want to invest in consumer product counters due to low profit level plus rich valuation.

2023-09-24 19:56

Nepo

It seems bottom has reached
buy in @ RM22.58

2023-09-25 13:25

CharlieM

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

2023-09-27 14:03

CharlieM

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

Market-Moving Policy Initiatives of Unity Government!

Top picks:
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7️⃣ KPJ (5878)
8️⃣ SUNCON (5263)
9️⃣ DLADY (3026)
🔟 MBMR (5983)

2023-10-02 09:51

dam82

Cost savings
To strengthen FrieslandCampina's competitive position, Expedition 2030 focuses, among other things, on annual cost savings of 400 to 500 million euros from 2026, with significant savings starting in 2024. The entire company has to reduce costs, with the main focus on the support functions. This will result in restructuring and job losses. The 400 to 500 million euros in cost savings do not concern closure of production locations. A part of the annual savings will be needed to off-set inflation. The remaining margin expansion will be equally divided between investing in sustainable growth and increasing the company's net profit.

2023-10-08 18:56

CharlieM

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.

2023-10-09 10:40

CharlieM

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.

2023-10-09 10:48

CharlieM

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)

2023-10-09 10:51

Up_down

It sounds like recycling the old news again. The company should give more information to the market about the raw material prices locked-in with the mother company for the next 6 to 12 months.

2023-10-09 11:20

CharlieM

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.”

2023-10-09 12:35

Up_down

Not many know the raw material price of milk has dropped back to pre-covid level and many remains in the dark for the next few quaters unless it were clearly infomed by the management.

2023-10-09 13:49

CharlieM

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.”

2023-10-09 16:31

Up_down

The gross margin will be gradually recovered in the next few quaters before including additional revenue and profit contribution from the new factory as a result of SEA regional market expansion.

2023-10-09 16:58

CharlieM

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

2023-11-07 21:11

CharlieM

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

2023-11-08 11:06

James_Bond

Zus coffee also boycotted! Right timing to boycott “Dutch”-“lady”milk…

2023-11-13 19:36

DividendGuy67

Well, this stock dividend yield is a bit too low for my liking ... it's a pity because it used to be a great company.

I haven't researched enough about the company but the dairy products market is a mature market, and I'm not sure (and probably someone should research more into this segment) but I saw somewhere that global dairy market is expected to only grow by 1% per annum over say next decade or so ... it feels like a mature market to me.

Malaysia could be different, as our population is perhaps younger but still not that young anymore compared to say faster growing population countries.

Worrying for me is the trend in the past 10 years on other milk alternatives - I read somewhere this segment is growing much faster than past 10 years ... and likely their future growth will be faster than milk ... I hate the plant milks, but millions of people disagree with me ... it's not what I like that's important - it's what the market likes.

I need my stocks to pay dividend yields higher than the best FD rates out there ... at least 4% per annum yield, before I get interested. It is quite unlikely, but if the global growth in future isn't there, and whilst the production capacity can grow 2x 4x, I need some more convincing that the market can absorb this kind of long term production growth plan, when more and more alternatives to dairy products are coming in with faster historical growth rates in the past compared to dairy ...

I'm a newbie in this industry to be honest.

2023-11-15 00:50

DividendGuy67

Just had a quick glance on its past 10 years EPS and Net Profit in its entirity. Over the past 10 years or so, revenues has clearly grown but its Net Profit has declined - that's not necessarily a good sign and 10 year trends are not so easy to ignore. I'm a newbie, but I will want to see some pretty strong assurances that Net Profit can grow again in the future. If Net Profit is stable (and based on history, that's a good result), the dividend yield of 2%-2.5% is just not attractive enough for me. I need 4% or the prospect of seeing 4% in say 1-2 years time ... production capability is one thing but if it means bigger revenue at even lower profit margin, I'm not too sure this is a business with a real moat ... what might convince me is why would dairy demand in the future would grow when past 10 years, it hasn't really grown (revenue grows, but margin drops faster that net result is lower ...) - I think that's the hard question to answer.

Price wise, the price has fallen a lot ... so, maybe it's lower risk now than the past 5 years .. but I still can't convince myself to pull the trigger when DY is only 2%-2.5% and global growth market for dairy products looks mature to me, and competitors still haven't matured yet???

2023-11-15 00:58

DividendGuy67

I saw someone posts that DLady's margins is expected to improve, but based on past 10 years, its margins look like it is declining, so, playing devil's advocate, very interested to learn why would that long term trend suddenly change this year or next year? If not mistaken, production capacity is expanded, so, supply looks to rise, so, why would margins improve? On what basis? Some one mention past 3 years but what about past 10 year decline in margins? ... I could be wrong ...

2023-11-15 01:03

DividendGuy67

Technical wise, looking at past 20 year charts, the stock price is still downtrending the past 5 years ... it is trying to form a base at around 22.5 ... so hard to read these kind of charts ... but if the Weekly RSI can get to oversold again and price doesn't make new price lows and able to hold swing low of RM20.22, then, I could be a buyer but I need to see its price action first over the next 12 months or so ... I feel like keying in a GTC Buy order at 20.50 say but that's an insult to the market and likely very low odds of being filled the next 1-2 months because it looks like it doesn't want to go anywhere for next few months ???

2023-11-15 01:06

DividendGuy67

For nearly 2.5 years (2020-2022) it tried to form a base at 32-34 but failed to hold ... this kind of price action is not good at all. So, now it tries to form a base at 22.5 ... a much lower price and normally, this kind of attempt has decent chance of being successful. However, it doesn't look like there's a catalyst to spur a price rise yet? Maybe that new production capability but it's also old news ...

And then, there's the threat of lab grown dairy ... I don't know if DLADY is at the forefront of this industry but somehow, operating in Malaysia, it doesn't seem like the country to lead the world in this area ...

With biomedicine on the exponential rise ... perhaps the future is more unclear than ever for the dairy industry ... this one is probably a mega-trend ... but I'm not knowledgeable enough in this area.

2023-11-15 01:12

DividendGuy67

I chat with recent ChatGPT about the historical supply demand imbalance in Malaysia over the past 10 years. ChatGPT qualifies that its data is only good until Jan 2022 but it has this to say:

Several factors may have influenced the supply-demand balance:

Domestic Production: Malaysia has been working on boosting its domestic dairy production. However, the country faces limitations due to land availability and climate constraints for large-scale dairy farming, leading to a dependency on imports for various dairy products.

Imported Dairy Products: Malaysia relies significantly on imported dairy products to meet consumer demand, which sometimes fluctuates based on global market conditions, currency exchange rates, and trade agreements.

Demand Fluctuations: Demand for specific dairy products might fluctuate due to changing consumer preferences, health trends, or economic conditions, influencing whether supply outstrips demand or vice versa.

Government Policies and Trade Agreements: Policies related to import quotas, tariffs, or trade agreements might also affect the supply-demand dynamics of dairy products in Malaysia.

2023-11-15 01:21

DividendGuy67

Just glanced at the Company's past 2 years annual reports and the last quarterly reports.
The thing that strikes me is the rapid depletion of cash - this company balance sheet is healthy but in just one year, its cash balance has dropped from RM105m down to RM61m. Whereas the value of the PPE rise by roughly similar order of magnitude. It's capital commitment is still quite substantial.
As at
30/06/23
RM’000
As at
30/06/22
RM’000
Authorised but not contracted for 219,957 ... 218,957
Contracted but not provided for 139,331 ... 232,769

So, 139 million is still much larger than its cash balance, suggesting that this company at some point is going to kill its cash holdings and turn into a net debt company ... I guess Mr Market is afraid this might be another LCTITAN ... previously a beautiful Net Cash company that turned into a massive debt profile with terrible turnaround.

I guess the jury is still out, if this investment is too big or not ... have to sleep over it ..

2023-11-15 01:51

DividendGuy67

My gut feel is no rush ... I mean, this stock price has fallen from RM77 down to RM22 over past 5 years. All the while while production capability was much smaller when price is at RM77 ... so, if this pays off, it should hit past RM77 if all else is equal ... but it is extremely unlikely suggesting that inside, something fundamentally may have been broken for such a huge fall ... is it a simple question of over-ambitious expansion? Or a lifetime opportunity for someone with a 10-20 year outlook? That's an extremely long time today in the digital world where alternatives are now sprouting much faster than any time before ...

This company only operates on 1 segment and betting everything in this segment ... high risk in this sense as food is changing ... question is can it grow to double, triple, quadruple demand for its product over the same period, or will it just be white elephant sitting mostly doing nothing under-utilized and not giving returns to shareholders? Or will they ramp up product to increase supplies and lower margins, to trigger competitors to lower prices too and thus reducing their advantages of higher production capabilities over next few years?

Maybe that's what market is concerned about?

2023-11-15 01:57

DividendGuy67

My good chat friend tells me this about DLADY's competitors:

As of my last update in January 2022, Dutch Lady faces competition from several major companies in the Malaysian dairy market. Some of the primary competitors of Dutch Lady in Malaysia include:

F&N Dairies: Fraser & Neave Holdings Berhad (F&N) operates in the dairy segment through its subsidiary, F&N Dairies. They offer a range of dairy products, including condensed milk, evaporated milk, and dairy beverages, competing directly with Dutch Lady.

Anlene (Fonterra Brands): Anlene, a brand owned by Fonterra Brands, is known for its products focused on bone health and nutrition. They offer milk-based products targeting consumers concerned about bone strength and overall health.

Farm Fresh: Farm Fresh is a Malaysian dairy company known for its fresh milk products. They have gained popularity for their locally sourced, high-quality fresh milk.

Emborg: Emborg offers a variety of dairy products, including cheeses, butter, and milk. While it's a Danish brand, it competes in the Malaysian market with its range of dairy offerings.

Other Local and International Brands: In addition to these major competitors, there are various local and international brands offering dairy products in Malaysia, competing in segments such as flavored milk, yogurt, cheese, and other dairy-based items.

Competition in the Malaysian dairy market is robust, with companies vying for market share by introducing new products, focusing on product quality, marketing strategies, and addressing consumer demands for health-focused, convenient, and innovative dairy offerings.

-----

Bottom line is I really don't know much about its competitors ...

2023-11-15 02:00

DividendGuy67

My personal experience in supermarkets is that honestly - they all look the same to me. I don't gravitate to any one particular brand, as DLady, F&N Dairies, Anlene, Farm Fresh, Emborg all feels the same to me ... after all, it's dairy products ... but I do find myself wondering about other alternatives like there are so many different variety of plant based milk for example ...

2023-11-15 02:02

DividendGuy67

In comparison to Dutch Lady Malaysia's dairy products, which are derived from cow's milk, plant-based alternatives typically use plant sources such as:

Soy: Soy milk is a popular alternative to cow's milk. It is made by soaking and grinding soybeans and has a similar protein content to cow's milk.

Almond: Almond milk is made by blending almonds with water and straining the mixture. It has a slightly nutty flavor and is often fortified with vitamins and minerals.

Oat: Oat milk is made from soaked oats blended with water and strained. It has a creamy texture and is often favored for its sustainability and creamy consistency.

Coconut: Coconut milk is made from the grated meat of mature coconuts blended with water. It has a rich, creamy texture and a distinct coconut flavor.

Rice: Rice milk is made from milled rice and water. It tends to be thinner and slightly sweeter compared to other plant-based milks.

Cashew: Cashew milk is made by blending cashews with water. It has a creamy texture and a mildly sweet taste.

Plant-based alternatives can also be used to create non-dairy versions of yogurt, cheese, ice cream, and butter. These products are formulated using plant-based ingredients like nuts, seeds, legumes, and grains, mimicking the taste and texture of their dairy counterparts.

In contrast, Dutch Lady Malaysia's products primarily consist of dairy-based offerings such as fresh milk, flavored milk, yogurt, and other dairy derivatives derived from cow's milk.

The choice between Dutch Lady's dairy products and plant-based alternatives typically depends on individual preferences, dietary restrictions, nutritional requirements, and lifestyle choices. Both options offer distinct nutritional profiles and cater to different consumer needs within the broader market.

2023-11-15 02:03

DividendGuy67

I think I'll pass, mainly because its Dividend Yield is too low for me.
My priority is at least 4%+ dividend yield.
But it's capital commitment is too high still.
Likely its Net Cash position will drop to introduce borrowings in the coming year or two?
So, it's unlikely to increase dividends.
That's for me means an entry now is still a bit too early.
I might miss the bottom.
That's okay as I already have nearly 50 different stocks.

2023-11-15 02:05

DividendGuy67

Can't help thinking about its long term monthly chart price action since 2000.
It feels like 2 different companies.
First company in fantastic growth phase from 2000 to 2018. 18 years of nice growth.
Second phase from 2018 down to 2023. Massive decline.
I also note many of its management team and CEO joins just after the peak. And they look young. And obviously very aggressive ... I wonder how this newer management team compares with the old ones from 2000 to 2018 ... or has there been a change in strategic direction?
Whatever it is - price charts say - this is 2 very different company.

2023-11-15 02:10

DividendGuy67

Since 2013 to 2019 inclusive, the company's Net Profit ranges from 109 million to 149 million. This is very good profitability relative to assets deployed.

From 2020 onwards, ignoring one time gains spike, this company's earnings has dropped to a paltry 40+ million in 2022. This is coming from huge asset base ... especially that massive capital commitment of - is it like 500 million? - if so, that maths doesn't make financial sense ... and what causes the huge decline?

This is why Mr Market is saying it's 2 different companies - pre 2019 vs post 2019. Is Mr market wrong? 🤔🤔🤔. Because if Mr Market is right ... it's not going to fit my dividend needs ...

2023-11-15 02:20

DividendGuy67

The Dividend payout ratio is also different ... in the first phase, paying out 100% of its earnings, sometimes more, is done to support dividends. But in the last few years, management no longer able to payout close to 100% because of that massive capital commitment.

The new CEO and the new Chairperson during the 2nd phase recently doesn't do themselves a favor in the annual report to lament about past 3 years milk industry ... especially when the company has committed to a huge capital commitment ... that doesn't project confidence to the market that their massive capital commitment is the right decision ...

I mean ... if management spend so much on capital commitment .. and not yet anywhere near over ... and management and Board complains about market supply demand volatility ... what does it tell you? Will you have confidence in such management, especially when they have been embarking on such huge capital commitment, to kill their dividend policy?

That is very hard for me to consider investing for dividends ... when it's unclear when they'll finish their capital spending ... and not so clear to me yet when their future earnings will start to rise again (ignoring one-offs). But to be honest, I haven't researched enough - all these are just first thoughts and so, comments welcomed ...

2023-11-15 02:32

DividendGuy67

But honestly, as value investors, when price fell from RM77 down to RM22, that's nearly 70%+ fall ... and would attract attention.

But once we look at EPS fall, or Net Profit fall, it's quite proportional really ... in the old days excluding one-offs, it feels like max Net Profit may have been around RM150 million (?) and now, we are looking at say RM43 million, which is also similar fall i.e. value today is still about the same as value in the old days, except PPE in the old days were smaller and deliver higher earnings?

There is a scenario where this higher PPE would pay off - if Malaysia market needs for dairy exploded - then that spare capacity could be put into production faster than competitors i.e. DLADY in that scenario would have a competitive advantage ... but it begs the question ... what is the catalyst that would push Malaysia market needs for dairy product to rise faster in 2024 that it couldn't do in 2023, given the COVID pandemic, the lock-down are old news already ? 🤔🤔🤔

2023-11-15 02:41

James_Bond

Zus coffee boycott sentiment heating up! Next in line is boycotting “Dutch”-“lady”milk…

2023-11-15 06:39

CharlieM

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.

2023-11-15 10:03

dam82

Dutch dairy cooperative FrieslandCampina cuts 1,800 jobs this will impact dlady so will have impact on P&L ...

2 months ago

viknes36

any reason why sudden spike?

1 month ago

CharlieM

Probably anticipating better QRs ahead..

1 month ago

ChangBL

Wow, long time did not log in. Dlady drop til RM20 only, this 3iii tak boleh pakai, remember 3iii asked to buy at RM70++. MUAHAHAHAHAHAHAHAHAHAHAHAHAHA

1 month ago

Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥

Well, let me comment. ChangBL posted so happily. Have a great day. Cheers.

1 week ago

CharlieM

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.

5 days ago

Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥

Y-o-Y.

Revenue increased 7.7%.
Operating profit incread 77%.

Due to softening of dairy product cost.

Generated about 200 m net operating cash flow.

Cape was about 180 m.

New manufacturing facility will be opened in 2024.

😀

2 days ago

CharlieM

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.

20 hours ago

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