Kumpulan Fima vs. Fima Corporation

The author published the analysis report here is for his own reference only. It is not an indication of the author's business interests for companies being analyzed. It is definitely not an investment advice, please see the full disclaimer located at the bottom of the blog post.

Kumpulan Fima Berhad's (hereafter called "KFIMA") principal activities including production and trading of security and confidential documents, oil palm cultivation including oil palm production and processing, bulk handling and storage of various types of liquid and semi-liquid products and manufacture and distribution of canned fish. Fima Corporation Berhad's (hereafter called "FIMACOR") principal activities including production and trading of security and confidential documents and oil palm cultivation including oil palm production and processing. KFIMA is control entity of FIMACOR, 61.92% shareholdings at financial ended 31 March 2011.

Side-by-side Comparison

 

Capitalization
Measure by size, both companies are similar, FIMACOR slightly bigger than KFIMA, 43 millions approximately.

Income Items
Important items under this section is per share earnings and dividend, FIMACOR is the all-time winner.

Balance Sheet Items
Both companies have a strong balance sheet and are cash-rich company as Cash or cash equivalents is more than enough to pay off all liabilities of the company.

Ratios
Given market price on 31 March 2011, both companies has similar level of valuation, following items catch my eye ball:

1. Net income/sales: FIMACOR has larger profit margin than KFIMA, 10% extra. 
2. Earnings/book value per share: FIMACOR has better rate of return compared with KFIMA, 5% extra. 
3. Total liabilities/book value: More importantly, FIMACOR achieved the results above with lower gearing than KFIMA. 

Also, FIMACOR has better earning growth prospect than KFIMA in both near-term and long-term.

Price Record
FIMACOR has better long-term (2001-2011) price growth rate compared to KFIMA, but the near-term (2010-2011) price growth rate of both companies are similar.

Financial Summary

KFIMA's Financial Summary

FIMACOR's Financial Summary

By looking into detail of the financial summary of both companies, FIMACOR winning all measurements except dividend growth rate.

The 23.38% compounded annual growth rate (hereafter called "CAGR") of total liabilities of FIMACOR catch my attention, it was caused by acquisition happened on 2008 which doubling the total liabilities. This is not an issue as cash on hand of FIMACOR is more than enough to fully cover all liabilities.

As conclusion, the ultimate winner of this comparison is FIMACOR.

How Much FIMACOR Worth?
Given the company CAGR of EPS is 15% (approximately 30.23% in the past 5 years) and Dividend Per Share is 10% in the next 10 years, the EPS of the company will be RM$1.958 in 2020 (included adjustment of 2 bad years in 10 which reduce 30% of group's net profit) and the forecast dividends received over the 10 years period totaling RM$1.67 (included adjustment of 2 bad years).

If the stock price of FIMACOR sell at 10 times earning in 2021, it is RM$19.58 and included total dividends received, it is RM$21.25 per share. Given annual 6% inflation rate in next 10 years, the discounted rate is 0.591898. So, RM$21.25 discounted to today price, it is RM$12.58 per share.

The discounted price is 119.5% higher comparing to today (22 November 2011) closing price RM$5.73! The stock is in great margin of bargain! What do you think?