kc, after further analysis and per your explanation , perhaps the impact of the fund performance on its bottom line is not that significant..

Alex, kind of agree with you on the point regarding the transparency of those investments...
Also having equity investments is not equivalent to liquid cash in FD or short term financial instruments as in a bear market, cash is king while equity investments will generally move down... so in that situation, where is the advantage of holding equities when you cant take advantage of available oppurtunitues unless you sell low...

I got interested in NTPM after reading the blogs here and did some analysis

Year 2012 2011 2010 2009 2008 2007
Revenue 449786 420227 383123 358557 306173 270730
EBIT 62746 69314 76474 60620 43926 40258
Net Income 44780 52063 59321 46222 34108 32190


Cash Flow of NTPM from 2006-2012
Year 2012 2011 2010 2009 2008 2007
CFFO 47624 47250 85521 57996 49575 38622
Capex 36922 38777 29140 23857 17812 13475
FCFF 10702 8473 56381 34139 31763 25147
Dividends paid 32571 32572 32573 38413 21119 14532
FCFF/Revenue 2% 2% 15% 10% 10% 9%
CFFO/NI 106% 91% 144% 125% 145% 120%

Year 2012 2011 2010 2009 2008 2007
EPS (sen) 4.0 4.6 5.3 4.1 5.5 5.2
DPS (sen) 2.9 2.9 2.9 3.4 3.4 2.3
DP ratio 72% 63% 55% 83% 62% 45%
Equity 283198 248742 228457 203931 181389 171441
ROE 15.81% 20.93% 25.97% 22.67% 18.80% 18.78%

The company's net income seems to be decreasing over the years even with higher revenue suggesting tightening margins. The lower net income was achieved despite the fact that pulp prices (their main raw material) remained low for the past 2 years. Where is this margin compreession coming from ? The minimum wave policy is also expected to have an impact on margins in future. The FCF is also much lower possibly due to overseas expansion indicated in higher capex ? Dividend payout is good but the past 2 years, dividend payment exceeded the free cashflow suggesting that it is actually digging into the cash reserves to pay the dividend... Has anyone projected NTPM intrinsic value ? Appreciate some feedback here...

kc, one thing I m not clear is that if it was really liquid why is it classified as non-current asset ? the value of such investments will move according to overall market... just feel that the excess cash would have been better used as dividends or stock buybacks to increase shareholder value...
http://biz.thestar.com.my/news/story.asp?file=/2012/4/23/business/11141970

Btw, I dont seem to come up with same PBT and net income value as you. I m assuming your numbers are from 30/6/2012 report, unadjusted for equity investment gain/loss

PBT = 48793
Net profit = 35826

How did you exclude the gain/loss from investments from your PBT numbers and come up with the final net income number ? For example in 30/6/12, excluding those fair value gain/loss of investments :-
Gain on disposal of financial assets = 5855
Fair value loss on finanical assets = -11309

Excluding this loss, PBT would have been 54247.

KC, Pintaras seems to invest a lot of their free cash back in equity markets instead of putting them into more liquid financial instruments ...this is good in bull market but wont it affect the performance in a bear market...

Questions
1. Do you exclude this fair gain from investments in your EBIT calculations and only show business related earnings ?
2. Looking at their excess cash from Q2 2013 statement it shows short term deposits + excess cash = RM105868, so where did you get your number of 152151 from ?

kc, as usual thanks for the great info... wished i had looked at it earlier !

how does this counter compare to TASCO

KC, did you have a chance to look at Willow ?

kc, I took a closer look at Prolexus,

Looking at the gross margins, its really tight (at the most around 5-6%) and their revenue growth isnt really that great the past 2 years (2011 and 2012). Their free cahsflow for 2012 was great but it was -ve in 2011 so the high FCF in 2012 could be due to lower receivables.

What's your valuation for this company ? And also did you have time to look at Willow ?

KC, very good... thanks

KC, how does ROIC exlude the cash component of the company ? In the equation fron Investopedia

ROIC = (NI - Dividends) / Total capital

After subtracting the dividends gives the funds available to be reinvested into the company.

And also what is the definition of total capital ? Assets (including long term debt) ? Is cash not part of the capital or it it excluded in the calculation? Care to elaborate ?

Here is another counter that might meet the 5 yardsticks and possibly undervalued:-

Willowglen MSC Berhad
Willowglen MSC Berhad is engaged in the research, development and supply of computer-based control systems. Its supervisory control and data acquisition (SCADA) system is used in security monitoring, building management and environmental control systems. During the year ended December 31, 2009, the Company delivered a hardware expansion board for the remote terminal unit (RTU) 6500 series, developed an internal hardware test system to further ensure manufacturing quality and released the SysLink version 3.8.2. SysLink 3.8.2 was developed to incorporate features, including openness, productivity and connectivity (OPC) client, support for more relational database servers and a new industrial standard protocol. Its operations are carried out in Malaysia, Singapore, Europe and other countries. As of December 31, 2009, the Company's subsidiaries were Willowglen (Malaysia) Sdn. Bhd., GB Tech Sdn. Bhd., Willowglen Services Pte. Ltd. and Willowglen (Hong Kong) Pte. Limited.


1) ROE (Consistently >15% except for 2011)
Year 2012 2011 2010 2009 2008 2007
ROE 21.06% 13.50% 15.26% 20.90% 16.10% 18.25%

2) Free cash flow - Healthy, low capex and consistently positive. The FCF is low for 2012 due to high amount of receivables from contract customers.

Cash Flow
Year 2012 2011 2010 2009 2008 2007 Average
CFFO 1623 5505 15065 8736 15309 5386 8604
Capex 1006 381 458 2541 1107 3721 1536
FCFF 617 5124 14607 6195 14202 1665 7068
Div paid7302.21 6085 7308 7427 4951 4956 6338
FCFF/Rev1% 10% 27% 10% 28% 3% 13.06%

3) PER
Based on EPS(TTM) FY2012 of 6.32 sen and closing price of 42sen, it is trading at P/E of 6.6 which is undemanding.

4) Dividend yield
Year 2012 2011 2010 2009 2008 2007
EPS (sen) 6.32 3.49 3.77 5.10 3.25 3.31
DPS (sen) 3.0 2.5 3.0 3.0 2.0 2.0
Payout ratio 47% 72% 78% 59% 61% 60%

Dividend yield for 2012 at closing price of 42 sen is at 7.1% which is great. It's strong cash position enables a high dividend but even then the earnings have been able to sustain the dividend payouts as there is minimum investment on capex. It is a net cash company with no debts. Cash/share = 12.6sen

5) NTA
The net assets per share is RM0.3. This implies a Price/NTA = 1.4 which is OK since this company is a service based company which is asset light.

6) Growth
Year 2012 2011 2010 2009 2008 2007
Rev 83427 52160 54470 62,001 51,157 51,937
Y-o-Y growth 59.94% -4.24% -12.15% 21.20% -1.50%
EBIT 18194 10180 11564 15164 9959 9677
Net Income 15231 8381 9312 12614 8061 8202
Y-o-Y growth 81.73% -10.00% -26.18% 56.48% -1.72%
Gross margins 21.81% 19.52% 21.23% 24.46% 19.47% 18.63%
Net margins 18.26% 16.07% 17.10% 20.34% 15.76% 15.79%

The growth has been not been consistent over the past 5 years possibly due to high percentage of profit derived from contract customes.

This counter may not fit in as a growth stock for now but it is a financially sound company and even as a no growth stock offers a decend dividend yield which is supported by strong cash flow. Comments ??

relax guys, retracing on low volume... should resume uptrend

Wow guys thanks for the comments. I learnt something new.

tptan, what s the diff between EPS(TTM) and the EPS reported in the Q42012 report ? The website you quote shows EPS (TTM) of 13 sen while the Q4 report shows 30.6sen... i guess the website may not have been updated with the latest quarterly data.. dont know...

tptan, where did u find this info ? Based on their 4Q report, FY12 EPS is 30.6sen vs FY11 EPS of 24.6sen

KC, what do you think about CRESBLD ? This stock looks undervalued to me.. KENANGA has a TP of RM1.35 for this stock. Havent done a detailed study, but a quick check on latest results :-

ROE 12.7077
P/E 3.25
EPS 29.2277
DPS 4.97
DY 5.23%
PTBV 0.4130
Market Cap 130M

If today close above RM1.8 I think looking good...

cool website to do fundamental scanning on KLSE stocks
http://klse.neobie.net/quote.php

already found a few gems from here

wah kc, so fast u pick up MBL ar.. i still din manage to catch it :P

haha... true true.... need to keep for long term...

perhaps we need to see MBL do the same thing like SKPRES where major shareholder sell down his stake to improve free float... haha

i found this in 2009 annual report. tax exempt to end by 2016

MBLT has been granted pioneer status by the Ministry of International Trade and Industry of Malaysia under the Promotion of Investments Act, 1986 for the manufacture of automated kernel crushing plant and related parts. With the pioneer status, 100% of the statutory business income of MBLT will be exempted from income tax for ten (10) years from 2006 (the first year in which MBLT has statutory business income

kc, the 21.9% dividend yield for CBIP is one off... I dont expect it to be that high in the coming years as they need to reserve cash for their planting activities. MBL has no immediate huge capex need so i expect their dividend payout will be quite consistent..

What is MEV/EBIT ? what does this tell us
ROIC ? Reterun on invested capital ? what is that ?

gark, their tax rate is like 2.x % . When does this low tax rates expire ?

gark, i agree that CBIp has a moat there... which is why i applied a higher R to the valuation analysis to MBL compared to CBIP....

http://sleepwellinvesting.blogspot.com/2012/03/cb-industrial-product-holding-vs-muar.html

looks like someone done a comparison before

muar ban lee

MBL has a CAGR of 25.6% for EPS and is generating consistent cashflow except for 1 year in 2010. ROE is also healthy and they have a dividend payout policy of at least 40%

Growth in revenue and earnings for MBL
Year 2012 2011 2010 2009 CAGR
Revenue 78799 55062 44085 25,417 45.81%
Growth 43.11% 24.90% 73.45%
EBIT 17121 12070 7609 8786 24.90%
NI 17096 12191 7215 8625 25.62%
Growth 40.23% 68.97% -16.35%
Gross 21.73% 21.92% 17.26% 34.57%
margins

Cash Flow of MBL from 2009-2012
Year 2012 2011 2010 2009
CFFO 22631 10570 -711 4236
Capex 2001 1058 4350 997
FCFF 20630 9512 -5061 3239
Dividends paid 9200 3680 2760 0
FCFF/Revenue 26% 17% -11% 13%

Financial health

Year 2012 2011 2010 2009
EPS (sen) 18.6 13.3 7.8 8.3
DPS (sen) 10.0 4.0 3.0 0.0
DP ratio 54% 30% 38% 0%
Shareholder equity 82295 69769 58307 54002

EPV analyis 2012
Revenue 50840
EBIT (average 24%) 12201.6
Tax rate (average-4years) 4%
NOPAT 11713.536
Less Avg Capex 2102
Add Avg D&A 1124
Norm EBIT 10735.536
Cost of capital 15%
Capitalized earnings 71570.24
Add Cash 37090
Add subsidiaries & JV 0
Less debts 0
EPV 108660.24
Less minority interest 0
EPV to common shareholders 108660.24
No shares 92000
EPV/share 1.18
Current share price 0.97
Margin of safety 21.76181085

The revenue estimate was done based on average revenue over 4 years. The current year revenue was actually much higher. The cost of capital set at 15% due to this being a smallcap and not much historical data. Even with such conservative estimates, EPV still comes up to 1.18 with a margin of safety at least 22%..

here s an analysis on MBL which is also doing palm oil processing equipment. Main business (from i3) : The design and manufacture of oilseed expellers and ancillary machinery for oilseed crushing plants; the design, fabrication, installation and commissioning of oilseed crushing plants, and the manufacture and sale of spare parts

they sold both sarawak plantations for RM268m... based on the Edge article in 3 June 2011

where you find this info on the yield ?

gark, the sarawak plantations were sold already due to poor yield I believe ? those other plantations you mention are not planted yet right ? reaosn is because i see 0 contribution from plantations in 2011 and 20112 revenue

From OSK initiation report
Total plantation land after the Indon acquistion will be 51000 ha
New planting schedule in 2012 will be relatively slow at about 1,000 ha per annum before progressing faster at about 5,000 – 6,000 ha per annum. With an estimated plantation development cost of about RM16,000 per ha, CBIP would need to fork out about RM80m a year for each new planting of 5,000 ha. Its disposal gain of close to RM140m is sufficient to fund its Indonesian plantation development expenditure for two to three years. The management is estimating an annual capital expenditure of RM25m for FY12, most of it will be spent on its plantation operation. We are expecting minimal contribution from its plantation segment until after its trees reach maturity in 2015.

gark.. totally agree on point 3... it also depends on how aggresive they are planting... they might even reserve cash for this planting expenditure rather than paying dividend....
I m not so keen on their upstream venture... although it will provide recurring income for them, they dont have track record in upstream and also there are tons of upstream players...

perhaps need to look at MBL resources, boilermech, these companies are also involved in making palm oil processing equipment..

Well you can always estimate EPV based on the average revenue you think is more reasonable... defnitely earnigns will go up and down, but fundamentally if in the long run it goes up, then you would still invest in the stock
perhaps you can share what your valuation is for CBIP ?

haha.... that's why initia;lly i told KC that DCF method is not suitable for company that have lumpy earnings / cashflow.. 5% for me is just a standard conservative number i use (slightly higher than inflation rate)... I prefer the EPV method that was discussed finally..

gark, u seem to know a lot bout this stock, whats your valuation tell you on the intrinsic value ?

which analysis u talking about ? DCF ?

yea margin of safety is there... I will definitely pick up on weakness.

It is very conservative... however based on OSK initiation report in June last year, their unbilled sales for palm oil mills are around 331m while for SPV its 310m. I think enough to sustain them for at least 1 year... the demand is coming mostly from Indonesia... so we may see some impact if palm oil price remains low...2012 revenue is going to be hard to beat... that s my opinion...

anyway... i m defintely going to queue this counter at around 2.45 to 2.50 as I m comfortable with the margin of safety analyzed so far...

again if the revenue for the latest year was actually achieved by the average growth rate from the past 5 years, then the intrinsic value derived would be more conservative...

it is conservative from the sense that it assumes zero cash flow growth... i agree on that...
no i do not think the business will contract year after year, but I m just saying that intrinsic value would be higher if you do the valuation based on an especially good revenue year. Knowing that CBIP revenue is derved from contracts rather than recurring. Say for example, you did this analysis last year (2011) where the revenue was not as high, the intrinsic value will be lower, but that doesnt mean that the company is not worth buying... so maybe other valuation techniques apply...

kc, using the current year revenue as a base to calculate the EBIT might be too optmistic, dont you think. The growth from 2011 to 2012 was 60% for the revenue, do you think this repeatable ? Perhaps use something like a median number from the past 5 years on the revenue is safer... just my opinion.

kc, nice sharing... the subjective part in the valuation is the cost of capital (risk). but at least there is no uncertainty in trying to project future earnings.... I like this method

If we look at the growth and revenue for only the manufacturing divisions (excluding plantations for the past 5 years)

Year 2012 2011 2010 2009 2008 2007 CAGR
Revenue 520.351 322.611 265.886 265.182 355.074 265.674 14.39%
EBIT 91.691 50.07 43.266 40.04 39.351 34.428 21.64%

Year 2012 2011 2010 2009 2008 2007
CFFO 38578 68236 66775 64907 45858 7277
Capex 0 -9497 -40001 -17596 -32355 -220
FCFF 38578 58739 26774 47311 13503 7057
FCFF/Revenue 7% 18% 10% 18% 4% 3%

The average FCFF/Revenue over the past 5 years is 10%
Assumning revenue in 2013 grows by a rate 14% which is the CAGR,
Revenue in 2013 = 593.2m
FCCF in 2013 = 59.32m

Applying the same calculations as before but excluding the predicted plantations contribution to cashflow

Current stock price 2.5
Shares outstading (mil) 272
Next year free cash flow (mil) 59
Perpetuity growth rate (g) 3%
Discount rate ( R) 10%
Cash Flow growth rate 5%

Sum of discounted FCF (RM mil) 458.2145445
Discounted perpetuity value (RM mil) 545.2018684
Total Equity value (RM mil) 1003.416413
Per share value (RM) 3.689030929

Margin of safety based on current share price 32.23152509%