DKSH Holding AG-DKSH, Zurich, has been appointed by the consumer goods multinational The Procter & Gamble Company, Cincinnati/USA (P&G) to sell and distribute P&G’s brands in Hong Kong. DKSH as the leading Market Expansion Services provider with a focus on Asia started these sales and distribution activities for P&G with effect from October 1, 2016.
Technologies 04-Oct-2016 06:45:02 PM DKSH's Business Unit Consumer Goods, Asia's leading Market Expansion Services provider for fast moving consumer goods of international and local brands, has been appointed as distributor of P&G products in independent stores in Hong Kong and will provide order management as well as field marketing for P&G's business with the chain retailers in Hong Kong.With a dedicated sales team of over 80 people on the P&G business alone and a unique capillary distribution network, DKSH will drive excellence in sales and in-store execution and create demand by providing a positive shopper experience with the P&G brands at every point of sale.'The cooperation with DKSH is crucial for us to ensure a sustainable business model in a rapidly changing environment. We are highly impressed by the expertise of DKSH and its dedication to drive business in local markets. Hong Kong is an important market for us. We have had operations in Hong Kong for 30 years and with DKSH as our strategic partner we are looking forward to making our existing and new brands available to more Hong Kong consumers in the coming years,' said Michael Yates, President, Greater China Market Strategy & Planning, Hong Kong & Taiwan for P&G.Dr. Joerg Wolle, President & CEO of DKSH: 'Together with our clients, we develop tailor-made partnership solutions. They benefit from our capillary market penetration, reaching the smallest customer entity, and from our critical mass. We have deployed a dedicated team of DKSH specialists to ensure that P&G will reach its targets. The fact that one of the most important and most professional consumer goods companies partners with DKSH in an important region, speaks for itself.'DKSH Hong Kong was established in 1923 and employs more than 1,000 specialists. Its market expertise, local knowledge and capillary distribution network provide the basis upon which DKSH offers its customers and clients attractive, tailored business solutions.
DKSH has a "Allowance for impairment of trade receivables" at rm 9.72 mil. That significantly pull down its profits, if not it will be a lot higher at rm15mil.
Ya, nature of its business. Also, I noticed a big spike in its "inventories" and "debtors / receivables". Possible significant jump in its earnings in its next Q4 result, assuming it is able to continue keeping its operational cost low at current quarter, and a lower allowance for bad debts.
ya I think the margin per customer have improved ( after they drop the telecommunication low margin customer) plus lower fixed cost but the bad debt is a bit worrying at YTD14.8mil. They really have to review their customer selection process in terms of credit rating and etc etc, otherwise no matter how much they earn, if cannot collect back also susah.
Like wise, I hope they can still sustain what they have make in last Quarter.
negative FCF may be just because they are really having a hard time to collect cash from their customers due to timing differences. But one thing to note, the biggest risk to this business are 2 things, inventory management and receivables management. One customer default will result a whopping impairment of 14.8mil.........
They should employ good loan shark company like Aeon credit to help them collect debt.... lol just kidding
Nobody actually knows the support level lar . It just a matter of sheered predictions . If everybody can know the actual support level , there will be no beggars on the streets begging and every stock investors can easily become millionaire overnight . Then who want to work ? Simple logic can proved it how ignorant and dumbed U are ?
Alamak got hammer down again . ......si kiaw kiaw already . .....just one counter stock can lead me to fall flat . Don't play play liao . ......Chasing stocks that have rose sharply will meet your day in tragedy . No long termed business in stocks market from much l have encountered
I am so surprised that the sell down in DKSH is so steep. I think the irrational sell down is overdone. My 2 cents on DKSH's 3Q16 result
1) record high impairment of receivable (RM14.5m) in 9m16 shouldn't be viewed as a broad base bad debt, management has mentioned this is one-off in the quarter results so I think it is an isolated case/client. Why would I so confident on this non-recurring impairment? Well, if you look at their past 5 yrs impairment on receivables, the avg impairment p.a was only RM0.2m (Don't just take my word for it, you can verify the numbers by checking its past annual reports). So I am not too concern on this impairment charges.
2) Profit is not that bad after you exclude the one-off impairment, which comes to about rm12m, as compared to RM4.5m in 3Q15. In terms of qoq, the profit is indeed a lot lower (2Q16 pat ex impairment = rm23.9m). This is mainly due to the 7% qoq revenue contraction. In absolute amount, revenue declined by rm98m qoq. Assuming 9% gross profit margin, the lost of profit is rm8.8m. So this adds up to rm20-21m quarterly profit if the revenue sustain at rm1.35bn, which is a consistent revenue base since 4Q15, before coming off in 3Q16.
3) Cash flow seems to deteriorated rapidly with many investor pondering where the cash has gone? Obviously, the cash lock up in working capital (receivables & inventory) after the sales disappointed. It would probably normalize in next quarter. If you noticed, the co's net cash position is always very volatile from quarter to quarter but the fact is, it has been in net cash since full year 2013.
In conclusion, DKSH's 3Q16 results was not very good, but definitely not in a crisis. If you exclude the rm14.5m impairment in 9M16, the co reported rm47m pat. If it makes another rm13m in 4q16 (+30% yoy), the co will probably match its record core profit of about rm60m in 2013 and 2014. Bear in mind, DKSH share price traded above rm8.50 in March 2014. Price has came off subsequently but avg traded price throughout 2014 was still above RM7.00.
Hence, it really doesn't make sense to see the price continue to trend down from current level. If revenue recover to 1.35bn per quarter, I think the profit will be closer to rm20m level.
Feel free to comment but appreciate constructive feedback. Thanks.
As always the case , investor's are very sensitive to negative issues that led to the declined in the stock price . Let's it cools down in days to adjust back to the price it should supposed to hold on with its intended stock value . Just my opinion.....bro !
I think investors are overreact on the 3Q result with panic sell down due to poor illiquidity. Excluding the one off impairment, FY16 could still made around RM60m, about 62% increase YoY (as compared to FY15). If assume earnings only flat of increase slightly to RM70m in FY17, current price at RM5 only translate to 11-13x P/E. This is significant discount to its parent company in Swiss which commanded above 20x P/E. I would be a buyer at this price.
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Unicorn_park
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Posted by Unicorn_park > 2016-10-04 17:40 | Report Abuse
I like the sideway trend of the chart.