Bloomberg - PW:MK
Yahoo - 7134 .kl
Webpage - http://www.pwconsolidated.com.my/
Webpage - http://www.pwconsolidated.com.my/
Sector : Consumer Products and Services
Sub Sector : Agriculture Products
Focus : Poultry
1) Interest Coverage Ratio
1) Days Sales of Inventory
1) Earnings per share
Focus : Poultry
Company
Profile:
PWF core business is integrated poultry farming. PWF
had it headquarter in Penang. PWF involves in feed manufacturing with a maximum
capacity of 26,000 metric tonnes per month. The feed manufacturing process is
fully automated.
PWF main products are boiler, table eggs and process
chicken. PWF able to produce over 5 million kgs of boiler per year, 3 million
birds of day old chicken per month, and 700,000 eggs per day.
Revenue:
PWF only had one operating segment and only operated
in Malaysia. Below is the revenue and operating margin of PWF.
|
5 Years Annualise Growth of Revenue
|
6.30 %
|
|
9 Years Annualise Growth of Revenue
|
3.94 %
|
In 2012, PWF operating margin had drop to the lowest
over the past 10 years at 2.3 %. This is due to oversupply of broiler in the
Malaysia market and increase of commodity price, soya and corn, the main
ingredient for poultry feed.
Nett
Profit
Bar Chart below shows PWF nett profit from 2010 –
2018.
|
5 Years Annualise Growth of Nett
Profit
|
18.83 %
|
|
9 Years Annualise Growth of Nett
Profit
|
20.58 %
|
From 2010 to 2012 PWF had done a corporate
restructure and report discontinue of operation in the annual report which
cause the significant low nett profit.
The discontinue operation are mainly from the acquisition
of companies from 2004 to 2008 by PWF. Some of companies acquired by PWF over
the year are Nayang Prosper Sdn Bhd, Liang Hwa Farm Sdn Bhd, Evergreen Breeding
Farm Sdn Bhd, Din-Hin Farm Sdn Bhd, Lean
Hong Duckfeed Sdn Bhd.
In 28 March 2013 three subsidiaries had wind up:
1) Everay
Agritect Sdn Bhd
2) PW
Tyres & Auto Service formerly known as Gold Star Tyre Mart Sdn Bhd which is
a subsidiaries of Liang Hwa Farms Sdn Bhd.
3) PW
Breeder (Taiping) Sdn Bhd formerly known as Evergreen Breeding Farm Sdn Bhd.
Other subsidiary wind up over the year are:
1) In
2019 Pin Wee Food Processing Sdn Bhd
2) In
2019 Pin Wee Chicken Trading Sdn Bhd formerly know as PinWee Food Industries
(KL) Sdn Bhd
3) In
2017 PW Nutri Processing Sdn Bhd formerly known as Di Hin Chicken Processing
Farms Sdn Bhd
4) In
2015 PW Properties Sdn Bhd formerly known as Liang Hwa Farms Sdn Bhd
There is a spike in 2017 revenue was mainly due to
revaluation of non current asset with a revaluation surplus of RM 61,288,579.
Assets
and Liabilities
Although PWF undergo restructure from 2010 to 2012
the asset value of the companies is maintain and PWF manage to reduce the
liability and hence the debt ratio of thought out the period. PWF manage to
grow their asset value over time while maintaining the liabilities. Most asset
value gain are mainly through revaluation of non current asset
|
Year
|
Revaluation Surplus (RM)
|
|
2017
|
61,288,597
|
|
2012
|
89,800,000
|
Trade
Receivables
After 2012, PWF trade receivable past due had decrease
to around 30 %.
Financial
Ratio
There would be few financial ratios to be look at
here:
1) Interest
Coverage Ratio (Green Bar Chart)
2) Cash
Ratio (Blue Line Chart)
3) Current
Ratio (Red Line Chart)
1) Interest Coverage Ratio
Interest coverage ratio measure how
capable the company pay off the existing debt. With an interest coverage ratio
above one mean the earnings before interest & tax (EBIT) is able to pay of
the full amount of the financial cost of the year.
Despite lower EBIT in the recent
year, PWF had maintain interest coverage ratio above one after 2012 and
recently had increase the interest coverage ratio to 4 in 2018.
2) Cash
Ratio
As cash is the most liquid assets
of the company, cash ratio is use to determine company ability to pay off short
term liabilities using cash. Cash ratio above one indicates that company able
to settle all current liabilities using available cash.
PWF had low cash ratio less than
0.10. PWF operate in low cash reserve as most reserve is use for expandsion as
a few acquisitions and investment in properties had done over the period.
3) Current
Ratio
Current ratio measures ability of
the company to pay off short term obligation (current liabilities). Current
ratio above one means the company able to pay off the current liabilities with
current asset.
PWF current ratio is maintain
around 0.9 which is 10% below one. Despite low cash ratio, PWF had substantial
amount of current asset to have a current ratio about 0.9.
Turnover in Days
Let
look into three types of turn over as follow:
1) Inventory
Turnover (Blue Line)
2) Trade
Receivables Turnover (Red Line)
3) Trade
Payable Turnover (Green Line)
1) Days Sales of Inventory
9
Years Days Sales of Inventory Median (days) – 75
PWF days of sales of inventory had
drop significantly from 100 days to 40 days. This mean PWF manage to sell their
inventories faster in 2018 compared to 2010.
2) Trade
Receivable Turnover (Days)
9
Years Trade Receivable Turnover (Days) – 30
PWF trade receivable turnover is
quite constant at around 30 days.
3) Trade
Payable Turnover (Days)
9
Years Trade Payable Turnover (Days) – 30
After 2014 PWF to maintain it trade
payable turnover above the receivable turnover. This indicated PWF manage
collect money from its receivable and use the money to paid its payable
Per Share Analysis
PWF
per share analysis is adjusted to 2:1 split in 11 July 2016
1) Earnings
per share (sen) (Blue Bar)
2) Dividend
per share (sen) (Red Bar)
3) Net
total assets per share (Green Line)
1) Earnings per share
PWF had inconsistent earning per
share. This is mainly due to disposal of non current asset and revaluation of
non current asset.
In 2015 there is a drop in Earning
per share because in 2015 ESOS is introduce and dilute the share outstanding.
2) Dividends
per share
PWF did not give out dividend consistently.
After 2015 there is a consistent annual dividend pay-out however the dividend
payment amount is varies.
3) Net
total assets per share
There is a significant
drop in net total assets per share in 2015 because ESOS is introduce and
diluted the share outstanding. Share outstanding in 2014 after adjustment is
118,116,128 while in 2015 the share outstanding increase to 143,287,548 which
is 21 % increase.
Director’s Remuneration
Some
company paid high remuneration to director despite low profit. Let see how much
is PWS director’s remuneration in comparison to staff fee and operating profit.
On
average PWF director remuneration is around 12.30 % of the total salaries
expenses.
Except
2012 where the operation profit is low, PWF director remuneration around 14 %
of the operating profit.
ESOS and Warrant
As
of 31st December 2018 the ESOS are as follows:
|
ESOS
|
Exercise Price
|
Balance
|
|
I
|
0.575
|
656,000
|
|
II
|
0.62
|
100,000
|
|
III
|
0.96
|
1,600,000
|
|
IV
|
0.81
|
3,325,000
|
On
13th April 2016, three free warrants is issued to every ten ordinary
shares. As of 31st December 2018 the warrant details as follows:
|
Warrant
|
Exercised
Price
|
Expiring Date
|
Balance
|
|
2016/2021
|
0.62
|
20th July 2021
|
43,807,863
|
Material Ligation
On
28 November 2017, PWF subsidiaries PW
NutriEgg Sdn Bhd (PWNSB) had commerce legal proceedings against Dehias holding
Sdn Bhd (Dehias) on refund of the RM 7,148,087 paid to Dehias for a
bumiputraland which unable to registered under the name of PWNSB.
PWNSB
also commerce legal procedures against Ong Teik Beng (“OTB”) for the refund of
breakage fee of RM 1,429,790 which they withdraw later on 5th
November 2018.
The
land purchase had cause PWNSB RM 8,577,877 which unable to transfer name of the
company. RM 7,148,087 which is still under the book under other receivable as
of 31th December 2018.