pua kah kin samuel - learning resources by investcoach ... · long term erp 11.69% interest rate:...
TRANSCRIPT
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Pua Kah Kin Samuel
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Disclaimer & Declaration The objective of the presentation is for educational purposes. The full content of the presentation is for illustration purposes only and should not be used as investment recommendations. AB Maximus and its presenters are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss. The company and presenters may have personal interest in the particular shares presented.
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Content Company Background Valuation Risks Conclusion Q&A
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Company Background Listed on 4 October 1996 in SGX
Mainboard Global supplier of fish products One of the largest importers of frozen
seafood in China Performs upstream industrial fishing via
its strategic investment in SGX listed China Fishery Group Limited (58% owned)
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Shareholding Structure
Obtained from PARD Investor Relations
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Business Segments Fishing Segment
Fishery & Fish Supply Industrial-Scale Fishing Sourcing Onboard Processing of Ocean Fishes
Frozen Fish Supply-Chain Management(SCM) Trading Sourcing & Import of Fishes
Fishmeal Processing Logistical Support to Commercial Fishing Vessels
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Products
Obtained from China Fishery Group Investor Relations
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Business Segments
$5,347.00 $4,369.00
Sales (HK$ Mil)
Fishing
Supply Chain Management
Obtained from PARD Annual Report
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Business Segments
$1,427.00
$393.00
Operating Profit (HK$ Mil)
Fishing
Supply Chain Management
Obtained from PARD Annual Report
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Business Segments – By
Revenue (HK$ Mil)
0.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
2008 2009 2010 2011
Fishing
Supply Chain Management
Obtained from PARD Annual Report
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Geographical
Breakdown
65%
18%
8% 7%
1% 1% 0%
Sales (HK$ Mil)
China & Hong Kong
Africa
Europe
East Asia
North America
Others
South America
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Valuation DCF Valuation
Free Cash Flow to Firm Estimate Revenue of Segments Apply Operating Margins Calculate Free Cash Flow to Firm Calculate Fair Price
Peer Comparison P/E Comparison
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Trading Data
Last Done 0.149
52wk Range: 0.14 - 0.28
Volume 1,598,000
Avg Volume (3 mnths) 1,829,800
Market Cap 475.91M
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Discounted FCFF HK$ Mil
Book Value of Equity: 10362.298
Book Value of Debt: 10058.191
Annual Interest Payment: 443
Tax Rate: 5%
Risk Free Rate: 2.64%
Market Risk Premium: 10.60%
Beta: 1.223
Beta Std Dev: 0.099
Equity Risk Premium: 12.38%
Long Term ERP 11.69%
Interest Rate: 4.40%
WACC: 8.34%
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Discounted FCFF
Asset Turnover
Fishing 42%
Frozen Fish Supply Chain Management 60%
Overheads Ratio 13.5%
Effective Tax Rate 5%
WACC 8.34%
Long-Term Growth Rate 2%
Long-Term WACC 7.99%
SGD/HKD 0.1606
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Discounted FCFF HK$ Mil Y/E 28 Sep 2011 2012E 2013E 2014E 2015E
Revenue
Fishing $5,346.51 $6,148.49 $6,763.34 $7,439.67 $7,588.46
Frozen Fish Supply Chain Management $4,369.43 $4,806.37 $5,287.01 $5,815.71 $5,932.03
Operating Margin
Fishing 26.69% 28% 28% 28% 28%
Frozen Fish Supply Chain Management 9.00% 9.50% 9.50% 9.50% 9.50%
Operating Income (Segments)
Fishing $1,426.79 $1,721.58 $1,893.73 $2,083.11 $2,124.77
Frozen Fish Supply Chain Management $393.22 $456.61 $502.27 $552.49 $563.54
Unallocated Costs/ Overheads $265.74 $294.05 $323.46 $355.81 $362.92
EBIT $1,554.27 $1,884.13 $2,072.54 $2,279.79 $2,325.39
Tax $30.50 $37.68 $41.45 $45.60 $465.08
EBIT (1-T) $1,523.77 $1,846.44 $2,031.09 $2,234.20 $1,860.31
Net Capital Expenditures
Fishing -688.57 -
$1,909.47 -
$1,463.93 -
$1,610.32 -$354.27
Frozen Fish Supply Chain Management -418.5 -$728.24 -$801.06 -$881.17 -$193.86
FCFF $416.70 -$791.26 -$233.90 -$257.29 $1,312.18
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Discounted FCFF
Firm Value (HK$ Mil) $16,028.00
Debt (HK$ Mil) $10,058.19
Cash (HK$ Mil) $218.07
Equity Value (HK$ Mil) $6,187.88
Minority Interest (%) 30.00%
Minority Interest (HK$ Mil) $1,856.36
Shareholder's Value (HK$ Mil) $4,331.51
Total Number of Shares 3,193,994,892
Fair Value (HK$) $1.36
Fair Value (SGD $) $0.218
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Sensitive Analysis
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
1 1.05 1.1 1.15 1.2 1.25 1.3 1.35 1.4 1.45
Sensitive Analysis
Fair Price
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Peer Comparison – P/E Companies Chosen
TSIT WING INTL KHONG GUAN FLOUR CONSCIENCE FOOD FOOD EMPIRE HLDG VIZ BRANZ LTD QAF LTD KENCANA AGRI CHINA MINZHONG DEL MONTE PAC LT PEOPLE'S FOOD MEWAH INTERNATIO PAC ANDES RESOUR SINARMAS LAND LT CHINA FISHERY GMG GLOBAL LTD YEO HIAP SENG SUPER GROUP LTD PETRA FOODS LTD INDOFOOD AGRI RE
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Peer Comparison – P/E
Pac Andes EPS: 0.029005
Average P/E: 14.42
Pac Andes Fair Price: SGD $0.418
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Valuation Fair Price by Discounted FCF SGD $0.218
Fair Price by Peer Comparison SGD $0.418
Current Price SGD $0.149
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Risks – Financial Risks Solvency Risk – Moderate Liquidity Risk – Moderate-High
Interest Coverage: 3.1323 Current Ratio: 1.5932 D/A Ratio: 0.49255
Currency Fluctuation HK$ Peg with USD
Large Minority Interest Minority interest of income amounts to 20%-35%
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Risk – Operational Risks Family Business Corporate Governance Fishing Segment
Weather changes Over reliance of customer – One customer’s total
revenue amounted to HK$ 1,511 Mil Over-fishing
Supply-Chain Management Dependence on supplier
Unsustainable Tax Rate
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