DATAPRP (8338) DATAPREP HOLDINGS BHD, The Prodigal Son Returns?
In a bursa announcement on 14 Dec 2021 (https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3218447), Dataprep announced that it had received notification from the Ministry of Health Malaysia to commence a trial run and deployment of COVID-19 Screening RT-PCR Rapid Molecular Testing at the the country's main international entry points namely, Kuala Lumpur International Airport (KLIA); KLIA 2; Langkawi International Airport; Senai (Johor) International Airport and Tambak Johor (Causeway). Their duties include the registration, sampling and testing until the issuance of the testing result.
So, what does this mean for Dataprep? Let’s look at a brief breakdown on the earnings potential:
Firstly, we have to look at the traffic for KLIA and Langkawi, as there is no data for KLIA 2, Senai (Johor) International Airport and Tambak Johor (Causeway).
If we are just factoring arrivals into KLIA and Langkawi for these two airports alone, there were a total of 32.25 million arrivals into KLIA in 2019 (pre-covid) (source: 2019 MAHB annual report https://mahb.listedcompany.com/misc/ar-rev/mahb_airport-state2019.pdf).
However, post-covid, the number plunged 78.57% to 6.91 million travellers who arrived at KLIA and Langkawi only (source: 2020 MAHB annual report http://annualreport2020.malaysiaairports.com.my/wp-content/uploads/2021/04/airportstatistics2020.pdf).
With the recent launch of ‘Vaccinated Travel Lane’ (VTL) initiative by the Malaysian Government with Singapore, and it is also expected to launch Thailand soon (hopefully), we should expect an increase of international travellers arriving at KLIA.
Nobody knows the exact quantum yet, but we could expect something along the line of 3 million international travellers into Malaysia for the first year (2022), with higher number of travellers into Malaysia for the subsequent years. Let’s just pluck numbers out of the sky and assume a base case scenario, say we can achieve half of the previous years’ travellers (16 million) over 5 years.
Every person must be tested by a PCR test kit upon arrival at KLIA and Langkawi (source: https://www.imi.gov.my/portal2017/images/fail_pengumuman/2021/11_Nov/VTL_Udara_EN_30112021.pdf; https://www.freemalaysiatoday.com/category/nation/2021/12/07/vtl-langkawi-bubble-travellers-need-to-test-every-day-after-arrival/).
Assume every test kit is sold at RM250 (source: https://www.prestigeonline.com/my/travel/malaysia-singapore-vtl-how-to-navigate-the-doctor2u-app-to-pre-purchase-a-compulsory-covid-19-test/) as the price is RM250 per test for Malaysian and RM350 to Non-Malaysian with 15% gross profit margin, 24% tax rate.
Assume the price for PCR test kit is cheaper by 15% year-on-year as production increases and demand remain constant.
Initial PE multiples of 15x due to its explosive growth potential and lowers to 10x as the earnings plateau.
The impact for this announcement is as follows:
|
|
2022 |
2023 |
2024 |
2025 |
2026 |
|
Travellers |
6,000,000 |
9,000,000 |
13,000,000 |
14,500,000 |
16,000,000 |
|
Price Per Test |
250 |
225 |
203 |
182 |
164 |
|
Revenue |
1,500,000,000 |
2,025,000,000 |
2,632,500,000 |
2,642,625,000 |
2,624,400,000 |
|
Cost |
1,275,000,000 |
1,721,250,000 |
2,237,625,000 |
2,246,231,250 |
2,230,740,000 |
|
Gross Profit |
225,000,000 |
303,750,000 |
394,875,000 |
396,393,750 |
393,660,000 |
|
Taxation |
54,000,000 |
72,900,000 |
94,770,000 |
95,134,500 |
94,478,400 |
|
Profit After Tax |
171,000,000 |
230,850,000 |
300,105,000 |
301,259,250 |
299,181,600 |
|
Number of Shares |
669,970,642 |
669,970,642 |
669,970,642 |
669,970,642 |
669,970,642 |
|
Earnings Per Share |
0.2552 |
0.3446 |
0.4479 |
0.4497 |
0.4466 |
|
Fair Value |
3.8285 |
4.4794 |
4.4794 |
4.4966 |
4.4656 |
This calculation is purely based on PCR test earnings potential alone without factoring other organic or inorganic growth potential.
Based on this calculation, assuming no dividend is given out, the company will be sitting on a RM1.3 billion cash pile that could be used for developing and refining current businesses, venturing into new businesses or merger and acquisitions.
Of course, admittedly, there are a lot of assumptions in play,
the real earnings will definitely and inevitably vary from this
calculation.
https://klse.i3investor.com/blogs/DFBB/2021-12-16-story-h1595626005-Dataprep_The_Prodigal_Son_Returns.jsp
