ok. Personally i takes receivable and payable seriously because these 2 are the most easily manipulated. Thank you for your explanation superman 99. Goodnight and HAPPY NEW YEAR !!!
Yes, hyteo, after transmile case, now we all see the breakdown of trade receivables in all annual reports.
Generally, the acceptable receivables over turnover ratio is 2-3 months, same goes to trade payables. Any longer terms will surely hurt the cashflow and high potential of turning bad.
Hi Superman99, just asking, please share with us how do you get the PE of 13.964? is it the 6 years average PE? just take the EPS for all of 6 years and divide by average share price?
actually, it is hard to say that CCB is a cyclical stock - 2015 was very tough on the economy - logically, CCB sales should suffer since mercedes benz operated in the niche and premium market segment. But then, 2015 proved to be a good year (in terms of sales and profit) for CCB despite a tough year on the economy. So, i don't think CCB is a cyclical stock.
Mercedes-Benz Malaysia Optimistic To Sell More Cars Next Year GEORGE TOWN: Premium German carmaker, Mercedes-Benz Malaysia Sdn Bhd, is upbeat on its sales for 2016 after 8,200 units were sold until September this year.
Its vice president of sales and marketing Mark Raine said he was optimistic of the growth in sales next year as the demand for the locally-produced models – such as the C, E and S classes – was still there.
He said after achieving about 65% sales increase year-on-year for 2014 against 2015 – the group would continue to expand to meet demand.
“I see a good opportunity next year for us to chart growth in our sales and we are eyeing to beat the record we achieve this year for 2016,” he told reporters on the sidelines of the Maritime International Showcase today.
He said the group currently has 28 showrooms nationwide and planned to open a few more to provide better services to the customers in line with the strong growth potential.
“We opened a showroom in Kota Kinabalu, Sabah, last week to ensure better customer satisfaction,” he said.
He said the group has introduced an E-Class model (Edition E) and two diesel models (E300 hybrid and CLS350).
“The launch will offer our customers more models to meet their personal requirements and needs which will contribute to our growth,” he said.
For the third quarter this year, Mercedes-Benz Malaysia’s year-to-date car sales jumped 70% to 8,196 units from the 4,817 units sold in the same period of 2014.
Let's talk about market perception on PE, if look at all companies in bursa, every company will have different PE ratio. Even companies within the same industry may have different PE as well.
First of all, PE 10 is my target price, not my estimation on how the stock should go, you may have your own target price over CCB, say7, 8 or 9, I am ok with it anyway, as there are hundreds of people out there selling their CCB shares now at the current price/PE.
I can't decide for market & I do not think I have any authority or power to convince everyone to accept my view, or else, the price should have gone limit up on 31/12/2015 then.
I just want to share how I get it & hope you can understand my basis, agreeable or not, it is your choice. As I say in article, you are welcome to disagree. (I did mention in my article)
Mr Market is the one who will decide what is the right PE should go for a particular company. (Though Benjamin Graham & Warren Buffett always think that Mr Market is always changing his mind or view on all stocks day in day out.)
Why I use historical average PE for the stock? Because that was the market view for the stock over the past years.
I have no idea why CCB is trading at lower PE than other car distributors, but I think everyone can put up as many assumptions as he wants to explain on the situation. I don't think I will spend my time of doing that.
Same goes to Gadang, I have no idea why Gadang was dropped from RM2 to RM1.16, then went up again to RM2.15, all happened within 6 months. All I can say is Mr Market is so unpredictable.
------------------------------------------------------------------------------------------------------------------------------ I use the same basis of calculation to find out that CCB match my all criteria.
When Gadang & CCB are doing very well year after year for past few years, the PE is getting lower at the same period of time, then it is very interesting to me, it is where I see it as an opportunity to invest.
I think I have mentioned many times in various forums that first thing comes to my mind is the safety of my hard earned monies. Low PE is always providing good Margin of Safety.
------------------------------------------------------------------------------------------------------------------------------ I make good money from reading Icon8888's articles on Gadang in i3 forum & after doing my own homework. I think CCB is another good opportunity to me & I would like to return the same favour to i3 forum users by sharing my homework done on CCB.
Hope everyone can see what I see, I may not correct anyway & you should responsible & liable for your own action & do your own homework if you decide to invest in CCB after reading my CCB article.
Next yr tough not? Yes. Everyone said property slow, bank bad debt to rise, consumer spending to slow, economic GDP slow, everything bad. Export maybe good, got govt project maybe good, low fuel, good for transport and also producer using many oil.....car? Still big no no. Tppa has many yrs to open yet, forget it.
I ask my free, oi, Benz said next yr expect sell more cars leh, can buy hapseng? He replied, DUI, guns common sense boleh? Gst plus all these hike jokes. Also, you think the salesman will say, no we expect to sell lesser car next yr? You guns otak boleh? I diam diam after tht.....
I try to avoid companies with sudden jump in profits due to gain on disposal of something or forex gain, that may also make PE low, but that's not sustainable in my opinion.
I rather miss the chance in investing those companies but wish all good return to those already invested.
Hyteo, the following can be seen from the 2014 annual report:
Most of the Group’s trade receivables are arising from financier in respect of finance provided to end customer, sales to reputable public listed companies and government or semi government institutions.
bcos of ur post, i did some research about main competitors for Mercedes especially for C class. I research for new cars or new models which priced below rm 400k. Apparently next year audi will release new A4 series, honda release new civic & civic type-R, hyundai, mazda all also doing their best. C class may not continue as good as this year. At least as a youngster, i believe majority young people will prefer go for new Audi A4 compared to Mercedes. Honda civic type-R perhaps for a lower budget sport car. This is just my opinion. I am not opposing CCB is great company. Just having discussion here.
Omg, hyteo. Don't waste your time telling old ppl any car better than Benz, they can't accept it and will use all vulgar languages over you. You better get your bullet proof shirt ready now!
Thank you so much for the info, hyteo, it is always great to learn something new through discussions. It is correct attitude to look/study at various angles to see if the stock is the cup of your tea or not.
If you don't feel comfortable on any particular stock, just move on & look for next one, surely you can get one sooner or later.
@ SuperMan99, i am quite intrigued by what CCB has done in FY14 - whereby it paid off the entire Banker's Acceptance of $90M using purely operating cash flow. If proven, then this company has the hallmark of a franchise - which is what Warren Buffett coined a company with an enduring competitive advantage.
Just imagine the ranks of MAtrix Concept, Gadang and Tambun Indah.
Upon closer scrutiny on the Cash flows Statement for FY14, it seems that they are able to negotiate better terms with their Trade AR and has a good standing with Mercedes Benz Services. - Firstly, CCB started off FY15 with a huge O/B of stock (from FY14) and they pared down by $31.7M. Consequently, there is a quantum improvement in stock turnover days from 81.6 days (FY13) to 44 days (FY14). This means they are selling like crazy and evidently, FY14 sales has improved by 42.3% over FY13 without the corresponding increase in Trade AR. Indeed, Trade AR stays largely the same btw. FY14 (RM50.3M) vs. FY13 (RM51.5M), - they managed to reduce their Trade AR turnover days from 29.2 days (FY13) to 19.9 days (FY14) which shows they have amazing bargaining power over their Trade Receivables, but what is even more amazing is this:
- they managed to increased their Payables to RM37.2M as shown in their Cash Flows Statement. But then, we expect to see that their Trade AP turnover days to shrink considerably but the Trade AP turnover days remain largely the same at 24/25 days for both FY14/FY13.
Interest free hire-purchase floor plan facility granted by Mercedes Benz.
Hence, upon closer scrutiny on their Trade AP and Other Accruals (note 19 to the Annual Report for FY12 to FY14), CCB is able to use its position as a 49% shareholder in Mercedes Benz to draw down an interest free loan from Mercedes Benz in the form of an interest free revolving hire-purchase floor plan facility (i don't know what is that...).
That explains why Accounts Payable increased by RM37.2M (without a corresponding reduction in Trade AP turnover days) which help to boost the Operating Cash Flows significantly to pay off the Banker's Acceptance of RM90M in FY14.
Using this facility, CCB has managed to reduce the cash conversion cycle from 85.7 days(FY13) to 39.3 days (FY14).
There is a possible short term liquidity issue and inability to pay special dividends during 2016:
Following CCB's rapid growth in FY14 to Q3FY15 (sales increased by 77.4% to-date), the Trade Payables and Other Accruals have increased significantly by 70.5% from RM119.3M (FY14) to RM169.1M (Q3FY15). In addition, they have to draw down a Banker's Acceptance of RM30.0M.
There is not enough cash on hand to pay off Mercedes Benz but i suspect Mercedes Benz is the one that ask them to party on.
Per Q3'15 report: CCB has failed the acid test because: - Trade AR and Other Receivables: RM94.9M - Cash on hand: RM37.2M - (excluding inventories because inventories are not considered liquid especially Mercedes Cars and motor vehicle spare parts); Total = RM132.1M - less: Total liabilities: (RM217.3M) Total = shortfall of (RM85.2M)
Will there be any SPECIAL dividend of RM1 plus to be paid during FY2016?
It seems now that all their cash is tied in inventories but inventories turnover days is more than 1 month (44 days). I don't think this is high risk because after all, Mercedes Benz is the one who bankroll them and ask them to party on and Mercedes Benz stands to gain because their car sales went through the roof but it is better to keep vigilant on this.
Due to this short term liquidity issue, i don't think they can pay special dividends during 2016. In addition, if CCB wants to repatriate its profit back to the parent company, Jardine Carriage in Singapore, it needs to declare more dividends to make up for the shortfall caused by the weaker Ringgit. It is reasonable to wait for 2017. Also, in the Q3’15 Qtr report, CCB has mentioned it wants to expand its distribution network.
Hi kancs, I love your works and these are truly admirable.
I don't quite agreeable to the last sentence, which on the CCB's ability to pay special dividend in 2016.
I am actually studying their cash flow statements for 2008 & 2009, I have been thinking how they managed to frank so much special dividends during the 2 years but without incurring much debts or worsen the balance sheet.
@ SuperMan99, i think it is quite safe to park the money here for 3 to 6 months to enjoy extraordinary capital gains - aka to ride the mercedes sales growth....and "cabut" after that...for long term, i prefer Tambun Indah - even though it is a property counter but it is more like Matrix - it has got everything to offer - growth, constant dividend payout, good corporate governance (unlike that stupid GOB~!!), exposure to mainland Penang, Tambun Biscuit...it is hard to buy into TamBun Indah at present price of RM1.40 if not for the property crash, frankly, i am just here at CCB for the quick money.
I am monitoring Tambun as well, now waiting for their sales figures in the coming QR, as some claimed Tambun has registered interest to purchase their units in new developments but was waiting for licenses from the relevant authorities.
Definitely worth a look... but I checked this website http://paultan.org/topics/special/maa-vehicle-sales-data/ and it seems the sales have gone down in Q4... For Oct-15 and Nov-15 total sales volume is 1200 cars. They need to sell about 2000 units in Dec-15 to match Q2 and Q3 numbers...
Paperplane like to make enemy everywhere, if price drop like hell like kesm, then it is holland lah, but just didn't go up as predicted, that is not holland lah.
------------------------------------------------ Posted by moneySIFU > Apr 13, 2016 10:58 PM | Report Abuse X
What you said is not fair, when superman wrote about CCB, the price was RM3.18, now is RM3.46.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
hyteo1992
134 posts
Posted by hyteo1992 > 2016-01-01 02:46 | Report Abuse
ok. Personally i takes receivable and payable seriously because these 2 are the most easily manipulated. Thank you for your explanation superman 99. Goodnight and HAPPY NEW YEAR !!!