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I'm still learning to read a report. I can see prior to 2018, they registered double digit growth in their profit, with 5 years revenue growth average at 7% (correct me if I calculate it wrong). and in 2018 their business seems stagnant. 1QF19 also shows a drop QOQ profit mainly cause by increase in operating cost (imported products).
hi Rafie, CCK as we know is involved in retailing and poultry farming, consumer products if you will. it has operations and networks in sabah, sarawak and Indonesia. consumer products companies main challenges is to reduce costs and selling overseas. and consumer products market growth will not grow beyond the GDP, sometimes even lower than GDP. Malaysia GDP forecast lower end is 4.3% and Indonesia is 5.0%. imo - Indonesia operations and revenue will continue to grow faster than Malaysia.
Indonesia is definitely a nice position for CCK to be in as it recorded the highest foreign fund inflow recently as well. and you can see the GDP forecast difference as well. from financial perspective, you are right that pre 2018 recorded low double digit revenue growth btw 9.5 to 13% yoy and 2018 was at less than 4% yoy. stagnant as it seems. however, the company invested all it's $32M ops cash flow into new assets - production plants, broiler farm in 2018 resulting 0 free cash flow.
same situation with Q1'19, whereby the company invested it's positive ops cash flow into assets again. the business is sensitive to forex resulting in higher feed price and imported products. COGS is going up in 2018. 2017 recorded the lowest COGS over the last few years. as mentioned earlier, reducing cost will bring down it's COGS. it has also a 30% dividend pay out policy. looking at it, company is investing it's cash flow to expand and meet growing demand, it's a positive development
from a dcf valuations perspective, it's not possible to do it at the moment as Q1'19 is still reporting 0 free cash flow. If the company can generate $20M fcf for 2019, imo - the per share value is approx 0.71 cents. using a 30% margin of safety, a possible entry is at 0.495 cents. from a price/book perspective, the 5 yrs avg is 1.1 and currently it is trading at 1.2 p/b. at 1.1 p/b, the share price is valued at 0.45 cents. There are different methods used to value share price like PE method.
good morning Cheng. thank you for your details explanation. where do I can check if I wanna know what kind of new assets the company is investing in? because like in the 1Q19 report, they only stated company acquire new assets at the cost of RM6m.
Can you help to explain why do company didn't include inter-segement revenue in their financial statements?
In the latest report also I see there's 2 new countries Australia n Vietnam started to contribute into company revenue. their prawn segment asset also increasing, but their prown segment contribution is still less than 5% from the company revenue. How to know if they investing into new countries? Is this kind of information available to public?
hi Rafie, good morning. you can refer to it's 2018 annual report page 7 - forward looking statement. the plan is to open a max of 6 retail stores in 2019. with that, the broiler farms will be expanded as well. the company has yet to adopt mfrs/ifrs 16 leases if not mistaken. Once it is adopted, there should be announcement made on assets acquired / leases. some companies which has adopted ifrs 16 has started announcing new asset leases. cck website announced new outlets opening as well
most inter segment sales or geographical revenue is reported in notes to financial statements. for q1'19, it's at notes A8 of pg15 for 2018 annual report it's at notes 38 pg102. invest in new countries and selling in new countries are two different thing. the details of assets/subsidiaries is listed in the financial notes as well. There is a number under the note column in financial statement annual report and have to go to the notes to get the details. hope this helps.
hi johnson, cck products are items that can be found in refrigerator or freezer of each household. the demand for these products will always be there. There are many competitors offering similar products as well. hence, entry price is important coupled with reliable financial performance of a company. a good entry is when it's selling near it's net asset value.
imo - to invest long term, you will need to monitor it's financial performance and exercise zero cost averaging on your positions. without zero cost averaging, it's difficult for retail investor to stay long in a position and no cash flow. hence, emotion will take over and drive the decisions. just my opinions and hope it helps with your research.
thank you very much Cheng. appreciate it much, sorry for bothering you with such basic question. honestly, my accounting knowledge is very basic, learn it thru Google never had any formal class.
morning Cheng, if you make comparison between CCK and layhong, which one is better in your opinion? in term of business performance and future prospect. Is halal food industry future in Japan really bright? plus is Olympics games in Tokyo next year will have big impact to food industry?
morning Rafie. Though question :) consumer products that offers higher dividend tends to do better in long run. for now, CCK pays better than Layhong. in terms of pricing, it is always safer not to buy consumer products at premium and in this case, both are selling near or below it's net assets value. CCK is slightly more diversified compared Layhong. retail ops for CCK is doing better than Layhong. brand wise Layhong's nutriplus is quiet popular here at peninsula.
CCK is in better position in terms of debt compared to Layhong. there's a lot of competition in the area of pure poultry player industry. having slight diversification minimizes the risk and volatility. imo - cck has a bit of advantage compared to layhong. just my opinions and could be wrong. hope it helps.
