KAMDAR GROUP BERHAD VALUE EVALUATION

Kamdar is a department store which bring in different concept for the local shopping experience. Aside of conventional products like casual wears, Kamdar also provide varieties of fabric for clothing and decorating uses. This has become a one stop shopping center for most of the housewives (This is where most of the male individuals suffer waiting and giving comments.) As I did evaluations for several garment manufacturer and trader before, I discover that Kamdar present its products in a way that fits middle and lower class needs where everything comes with a very low margin and thus push up the sales volume at the same time providing products with the moderate quality. Compared to other department stores, Kamdar put a very heavy emphasize on selling its fabric which is displayed in a very big portion of its floor space. As there are not much value added process like logo printing, packaging and clothing designing, this enables Kamdar to manage its inventories at lower cost without doubt. In order to expand its distribution network to reach more consumers, the company opened several branches across different states in Malaysia. Therefore, most of Kamdar’s capital expenditure goes to opening these branches for maintaining revenue level.

As purchase of garments and fabrics is a highly seasonal affected, customers flow will only increase when there’s festivals or huge sales promotions. Therefore, business will strive for a certain period and drop to bottom at another time. This causes a major cash flow problem where the company’s cash is stuck with the inventories for a very long time and lower the ability to order up to trend products. Aside of that, operating and maintaining department stores will lead to a very high cost. When stocks are mark up with very low margin, increasing overhead will slice the company’s profit lower. Recently, it is reported that there is substantial amount of unapproved cash withdrawals from its subsidiary where it reflect the company’s internal control is weak. This incident, however doesn’t deteriorate the fact that Kamdar’s ability of generating future earnings and hence it might be opportunities to buy it at fair price.

Although there is positive indication, the company’s operating cash flow is undergoing an extreme fluctuations for the past ten years. For evaluation purpose, I will eliminate 2012 to smoothen the cash flow annual growth rate calculation which is 12.14%. As for returns on assets and equities, it is quite weak and shows inefficiencies for ten years straight. I have no reason to go further after interpreting these basic data. Filtered out of my list.
Stock: KAMDAR Code: 8672

JERASIA CAPITAL BHD Value Evaluation

Jerasia Berhad is an apparel conglomerate which consists of manufacturing and trading activities. Owning a series of highly branded product mixes, Jerasia distinguish itself among the competitors in terms of target market where they aim for the middle and upper society. This is in conjunction with the change in trend among the youngsters where product’s brands are being highly emphasized to reflect their status and ability. Despite of their luxurious price tag, from my point of view, their ability to set up unique display windows and the brand along is able to attract a lot of customers. (Not to mention the crowd which the company can attract if they hold any kind of sales. When there is ordinary brand with discount, consumer will see it as stock clearance while discount of luxury brands means that they can get something of higher value with lower price. [It’s logical nowadays]). Moving on, capital expenditure is not vital for survival purpose. Instead, large amount of the company’s gross profit goes to other expenses (which I think is mainly regarded with marketing cost). Barriers of  entry by government is quite high as establishment of manufacturing factory in the third world country like Bangladesh (due to their low cost advantage) has been quite a serious issues for the locals recently.

Manufacturing workers working condition which are long ignored by the industry player occurred to be a very serious threat to the business recently. Poor working condition and collapse of factory building lead the locals to protest against discriminating wages and human right issues. Indirectly, cost of goods sold in the future will be affected. Also, changes of trend is a very high cost as the company need to recalibrate with their suppliers, workforces and marketing departments after every certain period.

With an extreme trend shown by free cash flow after operating activities, we can see that the company is yet to recover its cash level before the world financial crises. It never incur negative cash flow in the eight years until 2012 and 2013. Looking into both ratios, the efficiency level in deploying its assets and equity is also quite low although there are improvements as compared to before. Overall, the company is yet up to expectation at the moment.
Stock: Jerasia Code: 8931

BONIA CORPORATION BHD [S] Value Evaluation

Originated from Singapore, Bonia is a luxurious apparel manufacturing company distributing exotic products like leather apparels. As the sole luxury apparel listed company in Malaysia, Bonia faces less local competition. Instead, competitors are mainly from abroad. As the company’s revenue is mainly generated from Malaysia and Singapore, it depends highly on the purchasing power of the locals as well as international tourists. In terms of location, Bonia does a pretty good job in location like Pavillion KL, luxury retail outlet and busy international airports like KLIA and Changi. These locations are able to attract a lot of consumers and in turn directly contribute to the company’s revenue. As for barriers of entry, manufacturing luxurious apparel requires a tremendous amount of capital as well as materials from overseas. Being able to cooperate with Italian designer, Studio Pelletteria Alessandra, it is an extremely rare opportunity which contributes to the company’s product line to cope up with latest fashion derived from European countries. Furthermore, Bosnia has long established its strong branding in Malaysia and Singapore since two decades ago which enjoy certain customer loyalty and good images from the public.

As Bonia’s main target market is the wealthy high class society, this includes large portion of revenue coming from international tourists. Tourism is a very fragile industry in case of global financial crises, terrorism or pandemic outbreak. Also, trend changes in a unimaginable state where outdated design might result in excessive inventories.

According to the cash flow since 2007, it faces a huge fall during 2008 and gradually climb back to the level before after six years which is 0.23 per share. We can see that it takes a long time for the company to climb up after certain crises. Although both ratios show that the company is managing their assets and equities efficiently, the fact of the company's vulnerability is undeniable where in times of good or bad, it needs to continuously invest in its subsidiary and associates which can be up to 50 million per annum. Overall, it fails to show the ability generate steady growing income in the future which doesn’t fulfill the criteria of value investing.

Company: BONIA CORPORATION BHD [S] Stock: BONIA Code: 9288