United Malayan Land vs. Daiman Development

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.


United Malayan Land Berhad's (hereafter called "UMLAND") principal activities including property development, property investment, investment holding and leasing of lands. Daiman Development Berhad's (hereafter called "DAIMAN") principal activities including property development, property investment, sale of building materials, operation of golf, sports and recreation clubs, operation of bowling centre, nursery operation and investment holding.


Side-by-side Comparison

Capitalization
Measure by size, UMLAND is slightly larger than DAIMAN, 476 millions and 389 millions


Income Items
Important items under this section is per share earnings and dividend, DAIMAN is the all-time winner for both per share earning and dividend except averaged earned per share in 2009 to 2011 period.

Balance Sheet Items
DAIMAN have very solid balance sheet compared to UMLAND, Cash or cash equivalents almost can cover the Total liabilities, it is a cash-rich company which liquidity per share is 0.46.

Ratios
By look at Price ratios, DAIMAN is more attractive at the moment given it sell at lower multiple of 2011's earnings and much lower Price/book value per share, even UMLAND achieved slightly higher dividend yield.


DAIMAN advantages are much higher profit margin, almost double of UMLAND as shown by Net income/sales, but lower return on book value measured by Earnings/book value per share, which may due to the adoption of higher leverages by UMLAND.


UMLAND has much better earning growth rate compared to DAIMAN, please take note that DAIMAN achieved negative earning growth in 2009-2011 compared to 2005-2007.
 
Price Record
UMLAND and DAIMAN has comparable growth rate in near-term price record, but UMLAND achieved better growth in long-term, which may due to it's price start from a low base.

Financial Summary

UMLAND's Financial Summary

By looking into detail of the financial summary of UMLAND, the historical growth records doesn't look good, merely single digit growth, especially making a loss in 2008. The bright side of data above is UMLAND achieved acceptable 5 years average profit margin which recorded 15.9% and 14% for operating margin and net margin.

DAIMAN's Financial Summary

DAIMAN has better historical growth record compared to UMLAND, recorded CAGR for 13.58% in sales and 17.4% operating income, but low and unstable net income and earning per share, 6.7%. The bright side of this company is the management buyback it's own shares in the market which reduce 2.2% of it outstanding shares. Also, DAIMAN achieved impressive 5 years average profit margin which recorded 34.2% and 29.78% for operating margin and net margin, which more than double of UMLAND.


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


How Much DAIMAN Worth?
Given the company CAGR of EPS is 6% (approximately 6.7% in the past 5 years) and Dividend Per Share is 5% in the next 10 years, the EPS of the company will be RM$0.235 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$0.64 (included adjustment of 2 bad years).


If the stock price of DAIMAN sell at 8 times earning in 2021, it is RM$1.88 and RM$2.53 (included total dividends received) per share. Given annual 6% inflation rate in next 10 years, the discounted rate is 0.591898. So, RM$2.53 discounted to today price, it is RM$1.50 per share.


The discounted price is 23.7% lower comparing to today (30 March 2012) closing price at RM$1.85. The stock is overvalued! What do you think?


I'd love to hear comments from you!