09 May 2012

Power Root Bhd

This is the new investment item in my portfolio.

The main products of Power Root are instant premixed coffee and energy drink. From what we could observed in the hypermarket, I think it's fair enough to say that Alicafe series is now the top local brand in the premixed coffee market. Its Power Root series also had a significant market share in the energy drink segment.

Historical data of the company:


RM million
FY* Revenue PAT
2007 154.0 34.7
2008 178.5 39.3
2009 138.1 9.8
2010 153.1 10.2
2011 184.8 12.2
2012 217.0 16.7
     * FY ended 28-Feb each year.

Its performance had dropped significantly in FY2009. However, the company manage to recover from the economic crisis, and had shown a CAGR of more than 12% during FY2009~2012.

Segmental Data:


RM million
% %
FYE Local Export Total
Local Export
2008 159.4 19.0 178.5
89 11
2009 118.9 19.2 138.1
86 14
2010 133.7 19.4 153.1
87 13
2011 155.0 29.8 184.8
84 16
2012 170.8 46.2 217.0
79 21

We can see that the company's performance in the past few years were partially boosted by the export market. Its export revenue had become more than doubled within two years time from FY2010~2012.

While I'm confident that Power Root could maintain its market share (with mild growth) in local market, I'm in opinion that its growth momentum in the export market will remain strong for the years to come.

Its dividend record:
  • 2008: 5.0 sen.
  • 2009: 4.0 sen.
  • 2010: 6.0 sen.
  • 2011: 4.0 sen.
based on the current share price of RM0.52, the average DY is about 10%. I believe that this dividend rate will be maintained in the coming years.

In short, my reasons of investing in Power Root -- riding on its growth momentum (my estimation, 10~15% p.a.), at the same time receiving its high dividend.


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