CI Holdings (1)

A New Beginning

Author: Icon8888   |   Publish date: Tue, 10 Feb 2015, 09:12 PM 

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CI Holdings

C.i. Holdings Berhad (CIH) Snapshot

Open 1.01		Previous Close 1.01
Day High 1.01		Day Low 1.01
52 Week High 04/1/14 - 1.27		52 Week Low 10/16/14 - 0.98
Market Cap 163.6M		Average Volume 10 Days 12.4K
EPS TTM -0.01		Shares Outstanding 162.0M
EX-Date 03/16/12		P/E TM --
Dividend --		Dividend Yield --

Strong balance sheets. The group has net assets of RM136 mil, cash of RM74 mil (almost 50 sen per share) and borrowings of RM12 mil :-



The group sold off its core business of soft drink distribution in 2012 and made a huge cash distribution back to shareholders. With the remaining cash (and through issuance of new shares), the group acquired Continental Resources Sdn Bhd (packaging of edible oil) in 2014. This new division started contributing to revenue and earnings in the recent two quarters.

Quarter Result:

F.Y.	Quarter	Revenue ('000)	Profit before Tax ('000)	Profit Attb. to SH ('000)	EPS (Cent)	DPS (Cent)	NAPS
2015-06-30	2014-09-30	87,543	1,343	846	0.52	-	0.8400
2014-06-30	2014-06-30	63,511	273	-698	-0.48	-	0.8300
2014-06-30	2014-03-31	9,593	-2,105	-2,145	-1.51	-	0.8000
2014-06-30	2013-12-31	9,200	129	65	0.05	-	0.8200
2014-06-30	2013-09-30	9,953	327	216	0.15	-	0.8200
2013-06-30	2013-06-30	10,888	67	-129	-0.09	-	-
2013-06-30	2013-03-31	8,909	-31	-53	-0.04	-	0.8200
2013-06-30	2012-12-31	9,789	99	-47	-0.03	-	0.8200
2013-06-30	2012-09-30	9,787	-64	-299	-0.21	-	0.8200
2012-06-30	2012-06-30	10,019	-688	-260	-0.18	-	-
2012-06-30	2012-03-31	10,396	1,410	1,172	0.83	-	1.3200

As shown above, the tapware and sanitary ware business is not really profotable. Earnings growth is driven by the edible oil packaging business.



Continental Resources Sdn Bhd exports 85% of its products. It should benefit from recent weakening of Ringgit.




Comments

(a) Post disposal of Permanis and cash distribution, CI Holdings has acquired, inter-alia, Continental Resources Sdn Bhd as its new core business.

(b) The purchase consideration of RM42 mil (out of which RM20 mil was satisfied by issuance of new CI Holdings shares) represents PE multiple of 7 times (based on Continental net profit of RM6 mil).

(c) Continental exports 85% of its products, mainly to Middle East and Africa. CI Holdings will leverage on its marketing nertwork from the Permanis years to scale up the business.

(d) The recent weakening of Ringgit vs US Dollars augurs well for the group.

(e) I found Continental's business very interesting because it caters for the international market. As such, if managed properly, the scope for further growth is much larger than a company that sells only to domestic market.
CI's management team are specialists in consumer products manufacturing and distribution. They are now making use of those expertise to gradually build up the edible oil business.

(f) I don't mind having a small exposure to grow together with the company.