Na Hap Cheng last bought on 23rd Nov between RM 1.03-1.08; so now good buy?
Changes in Sub. S-hldr's Int. (29B) TEO SENG CAPITAL BERHAD
Particulars of substantial Securities Holder
Name MR NA HAP CHENG Nationality/Country of incorporation Malaysia Descriptions (Class & nominal value) Ordinary Shares of RM0.20 each Name & address of registered holder Own Name Details of changes
Currency: Malaysian Ringgit (MYR)
Type of transaction Description of Others Date of change No of securities Price Transacted ($$) Acquired 23 Nov 2016 10,000
Circumstances by reason of which change has occurred Market Acquired Nature of interest Direct Interest Direct (units) 3,870,389 Direct (%) 1.291 Indirect/deemed interest (units) 153,381,003 Indirect/deemed interest (%) 51.162 Total no of securities after change 157,251,392 Date of notice 29 Nov 2016 http://www.bursamalaysia.com/market/listed-companies/company-announcements/5273893
Good long-term prospects :- 1) Growth strategies; capacity expansion; diversification into other streams and cost-saving initiatives 2) Improved earnings visibility with 2-year CAGR of 41% in FY16-FY18F 3) RM1.38 TP is pegged to 11x FY17 EPS
The Business
Modern poultry farmer. Teo Seng Capital (TSC) is one of the largest egg producers in Malaysia with a daily output of 3.5m eggs, of which one-third of its production is exported to Singapore. The group is also involved in the manufacture and marketing of paper egg trays and animal feeds, along with the distribution of animal health products.
Aggressive growth strategies. TSC is a vertically-integrated layer farming player with a current market share of 8.8% in Malaysia and 19% in Singapore. TSC targets to steadily grow its market share to 12.5% in Malaysia and 30% in Singapore by 2019. We forecast earnings to grow in line with TSC’s targeted expanding market share, supported by 1) stabilisation of egg selling price, 2) expansion in daily production capacity; TSC plans to increase its daily production volume by +522k p.a. in Singapore and +982k p.a. in Malaysia; both by 2019, 3) vertical and upstream diversification, 4) cost-saving initiatives, and 5) superior operating margin compared to its peers. Its continued growth is also supported by management’s projected annual commercial egg consumption CAGR of 4.2% until 2019. Although TSC targets to grow at a faster rate than industry demand growth, management believes it will be able to achieve its targeted growth due to the fragmented local layer industry where the largest five players account for only c.37% of market share.
Stable industry outlook. Although there are fluctuations in the demand of eggs and ASP, we believe TSC’s outlook is still stable, as eggs are deemed inelastic goods as they are a consumer staple and small-ticket item in household spending.
The Stock
Fair value of RM1.38. Our fair value is based on 11x fully-diluted FY17F EPS, which is the industry’s average (excluding QL and Lay Hong). We have excluded QL and Lay Hong due to their larger market cap and higher institutional shareholding. The stock is currently trading at 7.3x FY17F PE. Although our PE target is above the historical mean PE, we deem this undemanding given our expectation of a strong 2-year EPS CAGR of 41% FY16-18F. The stock is also trading at a PEG of c.0.3x.
Strong fundamentals. Aside from its strong EPS CAGR, we also like TSC for its positive cashflow despite its aggressive expansion, coupled with low egg prices in FY16, superior net margins (c.10%) and positive ROAE (>13%).
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....
CaiShenYe
232 posts
Posted by CaiShenYe > 2016-09-13 14:16 | Report Abuse
when is the agm?