When talk about watches, what is the first brand that you ever think of? Rolex? Omega??? Tag Heur???
Now look at your wrist, your spouse’s wrist, your husband’s wrist, your children’s wrist, your friend’s wrist. What watch you/they are wearing? I can guaranty you that at least 1 out of 5 will be wearing a Casio brand watch. It can also either be a G-shock, Baby-G, Sheen, Edifice, Protrek and some other sub-line up of the Casio brand.
So why am I highlighting this? Because Marco is the official distributor of the Casio products in Malaysia!!! Could you imagine how good their business are? Well, let have a look on their 5 years P/L and you will know it better.
*Continuous profit earning throughout 5 years.
Now look at the rolling 4 quarters:
EPS is improved as compared to previous financial year,
Just recently proposed 0.7 cent/share. Buy now and you can enjoy a 4.5% better than FD when the EGM pass the proposal.
Now here is the spice. With strengthening of ringgit, the company shall enjoy a good earning from their retail business. Why?
Since 2015 the company has make 2-3 continuous hike of price for the products that they distributes which translate to roughly a 20% increment of their products price tag. Where I get the source? Well I am a G-shocks lover and also a reseller for casio timepiece and I collect watches and thus I am wide alert with the price changing. With the price comparison of DW-6900AC-2 (Retail price at Jan 2015= RM339.00, Retail price at March 2016=RM409 [already exclusive 6% GST]) Since the MYR/USD is peak somewhere around 4.42, thus I will use this figure to compare with Jan 2015 ringgit value which is about 3.50, the depreciation of ringgit is about 26%. So it make a good sense for the group to take up such move.
Now let see what have happened to our Ringgit in the past three months.
Ringgit is strengthening!! Appreciation is more than 10%! If the bullish sign continue we will likely to retest 3.80 level. By reviewing the annual report of 2014, you will know that the group conduct their stock purchase with USD. And the report do highlighted that If the Ringgit Malaysia strengthened by 5% against the following currency, this will result in a further increase/(decrease) in the Group’s profit and equity. From what I know, the company has not make any revision on the price tag of their goods. Thus, you can assume that the appreciation value will be all pocket by the company and translate into the company’s profit!
On my personal point of view, I am bullish on Marco. Based on the rule of thumb, PE=10, Marco group deserve a target price of 19.5 cent/share by referring to current rolling 4 quarters. Since the appreciation of ringgit factor has not been accounted, I personally thinks that it deserve a target price higher than that, I will use a PE=12 as a reference and set my target price as 0.23 cent/ share.
Disclaimer: Please do your own due diligence before you conduct your own trading. At the end of the day, you are the one who press the buy button. You yourself should responsible for the risk associated to your trading decision.
http://klse.i3investor.com/servlets/stk/3514.jsp
MARCO (3514) - MARCO HOLDING BERHAD- HIDDEN GEM WHICH STRONGLY BENEFICIAL FROM STRENGTHENING OF RINGGIT
http://klse.i3investor.com/blogs/ltwu/94222.jsp
