Tuesday, March 14, 2006

ROI on Yi-Lai: Part IV

How now for Yi-Lai?

Do you reckon that there is enough justifications for one to continue to hold on to Yi-Lai?

Oh, before you answer that, I am afraid that there is perhaps another issue that needs to be considered.

The dividend issue. ( Click
here for Yi-Lai historical dividends. )

From that site, Yi-Lai paid a gross dividend of 6 sen for its fy 2002, 13.5 sen sen for fy 2003 and 21 sen for its fy 2004.

What a cash cow! Awesome isn't it?

Now there's a problem.. a concern... so far fy 2005, Yi-Lai has only paid 7 sen. Another 8 sen dividend was announced and is pending... which means for fy 2005, Yi-Lai would only pay a gross dividend of 15 sen.

A gross dividend of 15 sen per share for Yi-Lai is still pretty impressive but it pales in comparison to what Yi-Lai paid last year.

How?

Drop in dividends wor!

How?

Is this acceptable or not?

What say you?

Do you reckon that there is enough justifications for one to continue to hold on to Yi-Lai?

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Btw... for those interested... hhc had drawn up a pretty good pro and cons comparison for Yi-Lai...

But i think it will make more sense if we make apple to apple comparison. If u see what the other tile makers are doing, u will agree that Yilai is the best company to invest in.

Some Pro for Yilai:

  1. High N. profit margin ~24~20% (Wthorse from 21% drops to 7& last Q)
  2. Revenue is still consistent.
  3. Trailing PE is still 7X compared to Wthorse 8X (it suffered huge drop in earning in LASt Q)
  4. Cash hoard around 48M (30 sen per share)
  5. No ESOS
  6. Management is still honest and no funny expansion or diversification.
  7. High ROE (~15%)
  8. High profit yield ~15%. Meaning that if u buy the company at RM1.2, theoritically it is making around RM0.17 per share in a year. Much better than building your own factory, i think,

Bad things

  1. Lembaga tabung haji is selling its share
  2. Major shareholder (taiwainese) is selling.
  3. COnstruction and property section is not in good shape. (yilai does export to Spore HDB, so not that bad).
  4. Cash hoarding is depleting so that cannot expected bumper dividen like last year (~0.21 per share).
  5. Not v liquid
  6. Low market cap which bar certain fund from investing in it (RM192 M only).

6 comments:

kingpin said...

yi lai can only move up from now...watch carefully. Reason...wait till i come back.

QueenPin said...

did the QUEEN give you permission come back?

hhc1977 said...

nm,

During my house renovation, i had the chance to talk to some of the tiles vendor and constructor. According to them,

CHinese tile quality is improving leap and bounds in the last few year.

Thai tile is generally of higher quality and finishing. Even ppl like me who is no pro in Tile, i can also tell the difference between a thai and china mari.

Yilai tiles (alpha) is something in between. I would say that Yilai is a little weak in its distribution network (esp in northen region). V hard to find alpha in consumer market. This might be a blessing in disguise since cut throat biz is the consumer section.

BTW, whitehorse has v bad reputation problem w their tile. Some of friends bot grade A tile but received something like grade C. And the tile wrapped after a few months.

My renovator strongly advised not using whitehorse but china one is ok. He didnt use china tile 3 ways back.

Moola said...

hhc,

Wahh... thanks for all those priceless info!

Soooo... is ur house ready?

:D

hhc1977 said...

nm,

oredi moved in. Now busy with my marriage on June.

Moola said...

Waaa.... congratulations dude!

Cheers!