The previous 3sen Dividend would be a bit disappointing but would improve gradually i believe, as this can be seen through their expansion plan by having their 11th factory in placed and taking over of TPC plan though it is a struggle bid. The current NAV stood at RM2.23, which mean the company trades at just 58% of NAV. With the expansion of plant, i would foresee a climb in future revenue and net profit figures. This would mean a better future dividend and they used to pay 50% of it earnings as dividends way back in 2007, i would expect it may continue again. If so, then base on 22.37sen EPS a minimum of 10sen dividend is likely possible by early next year.
My way of simple FV based on current valuation would be 7.5 X 22.37sen = RM1.67. Thus, a 6 months mid term of investment would possible to see the price trading about 75% of NAV to somehow at least finding it actual value for Lonbisc.
The only set back for Lonbisc is it high short term borrowings which stood at RM114 millions, if this is not control well it may turn out to be a disaster to Lonbisc but luckily Lonbisc has a very high reserve from it retaining earnings where a figure of RM99 millions to counter the set back. Alternatively, a one off RI would do the business by knocking down it borrowings.
8 comments:
This one not in my portfolio. Just browsed thru the statements and found that you are right earnings are good on paper. Last years figure EPS stood at 20.52 sens and PER at that earning is 7.49X... very tempting.
This years Q4 results not out yet but earnings upto Q3 at 13.39sen still relatively good. At that rate projected EPS for the year should be around 17.85sens and PER =7x is still very very tempting too.
BUT if you care to follow the NTA or NBV. Last fiscal year ending NTA = RM2.23 and yet for the whole of this year of 3 quarters (9months) there were no dividends issued and yet with that sort of earning (13.39sens), the NTA instead of going up (2.23+13.39=RM2.36) it dropped to RM2.04 at Q3 endings? Why? What happened? Where's the leak? Have to go deeper to dig up the worms before we move on?
elmo
I agree with elmo that not all is rosy for London Biscuits. On surface it is selling very cheap in terms of PE, price-to-sale, price-to-book etc. However I am concern about its use of fund. Its Return of invested capital (ROIC) last year was only 7%, a figure surely lower than its cost of capital, which should be at least 10%.Its ROICs were in fact less than 10% all these years. Its balance sheet is worrying and more than twice it earns goes to interest payment. It hardly has any free cash flows. With low ROIC, how to have good FCF to pay down debts, paying dividends, not to talk about acquisition of investment like TPC? It is dangerous to have high growth with low ROIC. With so many choices on Bursa, I will give this one a pass. I might be wrong as it seems I am the only few contrarians. But again, you will never know.
I've already sold off all Qcapital at 1.03-1.04 before ex-dividend and yesterday remaining share at 1.00 after ex-dividend, realize marginal gain
Today, i have bought back some PJ development at 72sen. Among PJ development catalyst are: Proposed 3 warrant for every exiting share and warrant, issue at 2sen/warrant for period of 10year; exercise price at 1.00. Based on current share price of 72sen, and exiting warrant of 4.5sen, the intrinsic value of newly warrant should be at least 14sen per warrant once listing sometime in Nov
Another pull factor are upcoming dividend of at least 4sen dividend together with good expected Q4 result by end of these month (based on higher progress billing of its Swiss-Garden Residence, both tower A and B already up to roof top).
In addition, PJ development should in in final stage to list its subsidiary olympic-cable by end of these year.
Update portfolio + Ultramargin line
1. Bjtoto 189% (cost: 4.19)
2. Bjtoto 26% (cost 4.144)
Second portfolio + Ultramargin line
1. Bjtoto 182% (cost 4.19)
2. PJ development 40% (cost 72sen)
elmo & KC share the same view. :)
elmo points out a good point there, the decrease in NTA mainly attributed by the dilution of ESOS shares by another 21%, thus the reduce of NTA overall.
KC's high growth with low ROI, in fact they have very thin cash balance from previous year where a whopping 89% reduce to a mere 4m now. Most cash (from borrowings) was used in active investing activities. That explained the growth part. The ROI is in fact around 8%.
As mentioned in post, the borrowing is worrying but this can't avoid for a growing business, hence, RI will do the business if they need to else just stick with it now. I focus on future growth where a steady growing in revenue is seen, higher future net profit would be expected. Mid term of future 6 months would see clearer picture for Lonbisc. We will wait and see then. :)
Have sold some of my Kfima at 1.13 today. :)
Hi Horse,
Good for us to dive into details of the Company. That I did not. Thank for your work. I just skimmed thru and the "dish" looks "sour" at least to me, so just walked by.
To the investors, we want returns, we need to project the returns we can possibly get from the Company we intended to invest into. In terms of 1. dividends; 2. future Growth of the Company; 3. Rise in NTA/NAV on the books; 4. About the Retained Earnings and Shareholders' fund.
We all are very familiar with lots of Listed Companies with profitable balance sheets but somehow at the end of the day the NTA is not performing. Dividends are miserable. EPS say RM1.00. Dividend 3sens! The management seems to play David Copperfield not just for one year but year in year out the same result. Funny no one takes them to court! We taken for a ride.
Again not to pour cold water here, I have my plate rather full at this point in time and as I have said before, at today's KLCI on the high side, I have to be cautious about counters with low PER. Unless our Market is that damned inefficient. Let us still keep an eye on London Biscuit, of all we know it MAY still be an undiscovered Jewel here. Tell you the truth, LonBis HAS BEEN & STILL IS ON MY K.I.V. LIST!!
Today, continue accumulate more PJD at 71.5sen
Update portfolio + Ultramargin line
1. Bjtoto 189% (cost: 4.19)
2. Bjtoto 26% (cost 4.144)
Second portfolio + Ultramargin line
1. Bjtoto 182% (cost 4.19)
2. PJD 52.5% (cost 71.8 sen)
horse
I've re-enter Citibank yesterday, bought at $3.85-3.87
hng,
very good price u catch there for C.
cautious, DJ may in red tonite. :(
elmo - u hv all the caliber to success in share mkt. :)
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