26 June 2013

Dutch Lady Milk Industries Bhd.

Just realised during this early June, that DLady is such a good company which suit my long-term-growth strategy. Not much research had been done before I decided to take it into my portfolio .

Bought it at RM47.20,a price equivalent to PE ~24,and net DY of 5.5%.... which i think is quite reasonable though not very attractive.


 x x x

company's financial performance review:




summary:
  • Revenue CAGR stood ~ 9%p.a. for the past ten years. 
  • Ten years profit CAGR at ~23%.  
  • an up-trend of profit margin and ROE.
  • continuous growth of dividend.
The growth of revenue had slow down a bit in past five years, but the profit growth rate still stood above 20%p.a., due to the continuous improvement on margin.
     x x x


    The company had just completed its expansion plan which could boost its UHT milk capacity by 50%. There's still many sub-segment of milk products market that DLady is yet to venture into. These markets provide sustainability of its long-term growth.

    I'm quite optimistic about the company's new product -- DutchLady Chocolate Drink, which had just been launched last year. I believe it had a potential to gain a significant share in the chocolate drink market.


     x x x

    Besides its long-term growth potential, DLady poses some attractive criteria:
    • It's the leader in its market (liquid milk and milk powder) -- had a market share higher than Nestle。
    • Focus on simple product -- selling liquid milk, and other milk products.
    • Focus on single market -- Malaysia and Singapore, that's all.
    • High profitability -- ROE had been >30% for many years, and now up to ~50%.
    • Strong cashflow -- which translated into good dividend record.
    • Huge cash, zero debt.
     x x x


    My expectation on DLady:
    • Continue to be a Leader, and further increase its share in milk product market.
    • Revenue grows at a 7~10% rate, while profit growth rate stand > 10% p.a.
    • Dividend maintained at same level as 2012. (RM2.60 per share)

    Expected return on investment, ~15% p.a.
    Expected period of investment, 5~10 years.


    now DLady weight about 7% in my portfolio.

    .

    1 comment:

    Anonymous said...

    what does the PBT and PAT mean~? thank you ~~

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