DKSH reported RM13.4m profit in 4Q16, +32.6% yoy & +146.2% qoq. This brings its full year 2016 profit to RM50.5m, +37% yoy. If we adjust the one-off impairment on receivables of rm15m in 2016, the full year core profit +70% yoy, translating to a record core profit of RM62m (13.4x FY16 PE). Since its inception, DKSH has never record core profit of more than RM60m p.a. This is literally a record year for the co!

As I expected, operating cash flow return to positive and the co closed the account with RM42.9m net cash as at FY16. I think this helps to clear the air as some investors were worry about the "deteriorating" cash flow in 3Q16. 

Management's tone on 2017 outlook is upbeat vs cautious view on 2016 when IR reported its 4Q15 results last year. Organic growth for the revenue was at high single digit in 2016, after adjusting for the impact of change of clientele for telco prepaid card. 

Going forward, the co is expected to continue to grow its revenue at mid to high single digit, while profit is expected to grow at 3x of its top line growth as I explained in my first article earlier. Assuming 20% core profit growth in 2017, DKSH is trading at 11x FY17 PE, or 8.2x PE if you exclude the net cash and net working capital (RM457m) as at FY16.

Again, for a distributor of healthcare and fmcg products, net working capital is as good as cash and that serves as a basis for the high teens PE multiples that most of the dominant distributor trading at, including DKSH Swiss which is trading at 20x fy17 PE.

By valuing the co at 17x FY17, the fair value would be RM8.00, translating to 52% upside from the current price. 

I am happy with the performance indeed.