Plenitude vs. Asas Dunia

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.

Plenitude Berhad's (hereafter called "PLENITU") principal activities including property development, property investment and investment holding, provision of management services for hotel industry and travel operations and trading of construction materials. Asas Dunia Berhad's (hereafter called "ASAS") principal activities including property development, building construction, investment holding and property investment.

Side-by-side Comparison

Capitalization
Measure by size, PLENITU is more than double the size of ASAS, 518.4 millions and 228.93 millions

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

Balance Sheet Items
PLENITU have much solid balance sheet compared to ASAS, Cash or cash equivalents is double the total liabilities, it is a cash-rich company which liquidity per share is 1.24 and cash available after pay off all liabilities is 169.38 millions (0.63 per share).

Ratios
By look at price ratios, PLENITU is much more attractive at the moment given it sell at lower multiple of earnings currently and historically and higher current dividend yield.

PLENITU advantages are higher profit margin and much higher return on book value as shown by Net income/sales and Earnings/book value per share. Even PLENITU has higher gearing compared to ASAS, it is not a concern at all as the company's cash is more than enough to pay off all liabilities.

PLENITU has much better earning growth rate compared to ASAS, 60.36% and 25.89%.
 
Price Record
PLENITU and ASAS has comparable growth rate in near-term price record, but PLENITU achieved better growth in long-term.

Financial Summary 

PLENITU's Financial Summary

By looking into detail of the financial summary of PLENITU, it show a steady historical growth records, recorded Compounded Annual Growth Rate (hereafter called "CAGR") for 7% in sales and operating income, 12% in net income and earning per share, and 8% in dividend per share. It achieved this steady result with minimal financial leverages and minor increment of total liabilities. Both return on average equity and assets are moderate, but satisfactory. I particularly like the low operating overhead attribute of the company (5 years average 7.01%) shown by narrow margin of Operating Income/Sales and Net Income/Sales.

ASAS's Financial Summary

ASAS has great historical growth record too, recorded CAGR for 12% in sales and 25% operating income, 33% in net income and earning per share. The company CAGR on the previous mentioned items better than PLENITU, but the loser is dividend payment, the company pay 2 dividends of similar amount out of 5 years. Historically, ASAS is more conservative financially compare to PLENITU, as it utilized minimal financial leverages (D/E ratio is less than 15%) compared to PLENITU, this may due to the company is short of liquidity. However, both return on average equity and assets are low, 5 years averaging 2.8% and 2.4%. Even the company have lower operating overhead than PLENITU, 5 years averaging 2.35%, PLENITU still in the winning side as it 5 years average profit margin is higher, 25.3% compared to 19.3% of ASAS.

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

How Much PLENITU Worth?
Given the company CAGR of EPS is 10% (approximately 12.2% in the past 5 years) and Dividend Per Share is 8% in the next 10 years, the EPS of the company will be RM$0.422 in 2021 (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$0.80 (included adjustment of 2 bad years).

If the stock price of PLENITU sell at 8 times earning in 2021, it is RM$3.37 and included total dividends received, it is RM$4.17 per share. Given annual 6% inflation rate in next 10 years, the discounted rate is 0.591898. So, RM$4.17 discounted to today price, it is RM$2.47 per share.

The discounted price is 24.8% higher comparing to today (1 December 2011) closing price RM$1.98. The stock is in great bargain! What do you think?

I'd love to hear comments from you!