Dear fellow readers,
This is my No. 2 Value Pick for 2018.
Once again, these writings are just my humble highlights (not recommendation), feel free to have some intellectual discourse on this. You can reach me at :
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Value Pick No. 2 : Poh Kong Holdings Bhd. (Initial Valuation RM 0.65 sens)
The
global markets have been quite volatile with some retracement since
President Trump announcement on protectionist tariffs. On top of that,
Malaysia is facing GE14 in the next 2 months. With a series of
unpredictable events, we are looking at Poh Kong currently at RM0.54
sens.
This is an old company in Malaysia with many years of experience in the industry. Well run management holding down a traditional family business. It has over 102 outlets nationwide and many sub brands like Hemera, Love etc. Fundamentally it is a sound company that has solid dividend policy over the years. In a way, the growth is rather stagnant with some narrow margins until 2017, they started showing bigger revenue and margin in the same year. Traditionally, it is around 1.4%, as of 2017, the margin has rised to 3.4%. This is an encouraging sign for us as it may seem there is a growth path there.
This is an old company in Malaysia with many years of experience in the industry. Well run management holding down a traditional family business. It has over 102 outlets nationwide and many sub brands like Hemera, Love etc. Fundamentally it is a sound company that has solid dividend policy over the years. In a way, the growth is rather stagnant with some narrow margins until 2017, they started showing bigger revenue and margin in the same year. Traditionally, it is around 1.4%, as of 2017, the margin has rised to 3.4%. This is an encouraging sign for us as it may seem there is a growth path there.
Additionally,
if you look at the 5 year track record, as of half year 2018, the
revenue is close to RM 490 Million, which is more than 2017. The
diversified product range, new brands and different market segment
penetration is enlarging the customer base for Poh Kong from the
traditional ones of the past. Also, if you look at the NTA of Poh Kong,
it is worth RM1.27. The current share price is RM0.54. With market cap
of Rm220 million but net value of RM363 million and generating free
cashflow of Rm60 million per annum, the balance sheet of Poh Kong is
extremely strong.
Poh
Kong is trading at a substantial discount on PTBV and PER compared to
regional peers like Hong Kng jewelers such as Chow Tai Fook despite
similar operations albeit a smaller brand name. If we take trailing
earnings, Poh Kong is trading at 7x PER and PTBV of 0.44x. While the DY
is not great at aroud 1.85%, at least the company has been declaring
consistent dividend over the years. Many good companies that are
expanding even after doing well refuse to reward shareholders, with 0
Dividend Policy through out the years. So far, first 2Q of 2018 have
exceeded first 2Q of 2017, this in effect shows a steady path of grow
for the company and may further solidify its market leader position in
Malaysia.
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Food for thought:
http://www.tradeview.my/2018/03/tradeview-2018-value-pick-no-2-poh-kong.html
