That Silver Birdie Once More!

Silver Bird was one stock that I wrote a lot on before. If you follow my postings on Silver Bird, you can clearly see that I am not a fan.

Today, I noticed that OSK had a report on Silver Bird (naturally I was interested to read what it wrote since it's a really slow day! :p )

Back in 2006, I did mumbled on OSK earnings estimates for Silver Bird in the posting That Silver Birdie... Back then OSK earnings estimates were an incredible 32 million (despite the current earnings back then, suggested it was near impossible to reach those numbers).

Now what's incredible is that since Silver Bird was losing money the past couple of years, OSK earnings estimates for Silver Bird is rather low. (Speak volume on the quality of this company!)

Only 1.6 million for fy 2009 and 5.6 million for fy 2010.

Now get this, back in March 2006, Silver Bird was trading around 65 sen. Today it's trading around 76 sen. (As mentioned in that posting, "And in Dec 2005, Silver Bird announced its 2005 Q4 quarterly earnings. Silver Bird made only a net earnings of 19.4 million for its fy 2005! And its Q1 earnings was some 1.1 million.

Silver Birdie of today? Let's look at recent news.

30th April 2009, on Business Times.

• Silver Bird confident of profit turnaround
  
  By Sharen Kaur Published: 2009/04/30
  
  BREAD maker Silver Bird Group Bhd (7136) said it is optimistic of returning to the black this year, driven by government subsidy for white bread, lower operating cost and wider distribution channels.
  
  The main board company, famed for its High5 high-fibre bread, reported losses in the last three consecutive years.
  
  For fiscal year ended October 31 2008, it posted a net loss of RM21.2 million on revenue of RM638.6 million, mainly due to the writeback of impairment loss in 2007.
  
  Group managing director Datuk Jackson Tan said 2009 will be a much better year for Silver Bird, thanks to the government subsiding 7.9 sen for every 100 grammes of white sandwich bread, lower wheat price, and new products it has in the market.
  
  The company expects business to grow by more than 20 per cent this year, outperforming the fresh bakery industry growth of 10 per cent annually, he said after a shareholders meeting in Shah Alam yesterday.
  
  "The industry is resilient. In this doom and gloom, we have an operating environment which favours us. Wheat prices have stabled while other food commodities such as rice have gone up by almost 30 per cent, making bread an alternative source. So the group is flying high in this turmoil," he said.
  
  Tan said a further downtrend in wheat prices may happen this year if the next harvest continues to be good.
  
  The next strategy for Silver Bird is to continue growing despite the economic downturn, Tan said.
  
  Silver Bird is investing a few million ringgit this year to expand its distribution network from 18,000 point-of-sale outlets throughout Peninsular Malaysia, to over 20,000 by December.
  
  It will also spend between RM3 million and RM5 million on advertising and promotion to strengthen its brand and products, and research and development.
  
  Silver Bird has 25 types of products in its consumer food segment and aims to launch new products every quarterly, Tan said.

26th June 2009. Silver Bird announced fy 2009 Q2 Earnings. It made some 393 thousand.

Aug 5th 2009.

• Silver Bird targets bigger slice of market
  
  By Hamisah Hamid Published: 2009/08/05
  
  BREAD maker Silver Bird Group Bhd (7136), which is on its way to record a full-year profit after three consecutive years of losses, is confident the newly-launched High5 Sure Value 500 bread will contribute significantly to its business.
  
  Silver Bird is aiming to sell about 40,000 loaves a day in the next couple of months and the number is set to increase in subsequent months.
  
  Group managing director Datuk Jackson Tan said the new variant to High5 sandwich bread is already in the market and has been receiving encouraging response.
  
  "We want to increase our market share and sales, especially with our largest stand-alone bakery plant in Southeast Asia. More than one million consumers enjoy our products daily," he told a news conference after the official launch of Sure Value 500 bread loaf in Shah Alam yesterday.
  
  At the ceremony, Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob was represented by the ministry's deputy secretary-general Daud Tahir. Also present was High5 brand ambassador celebrity Chef Ismail Ahmad.
  
  Tan said High5 bread controls over 20 per cent share of domestic sandwich bread market.
  
  He said Sure Value 500 bread will help the firm achieve a significant share in the sandwich bread segment.
  
  Silver Bird's flagship products are High5 white bread and wholemeal bread, which together account for almost 30 per cent of domestic market.
  
  Within the group, High5 sandwich bread contributes 60 per cent to the consumer products division.
  
  Tan said the new 22-sliced Sure Value 500 bread loaf is retailed at RM2.25 compared with the existing 19-sliced Nutri-White bread loaf which sells forRM2.10.
  
  He said the value-for-money sandwich loaf, which is introduced in conjunction with High5's 10th anniversary, is affordably priced for consumers, considering the current economic downturn.
  
  More than 300 million High5 bread loaves were sold in the domestic market in the last decade.
  
  For the first half of its financial year ended April 30, Silver Bird reported a net profit of RM497,000 on the back of RM305.2 million revenue compared with a net loss of RM16.9 million and RM315 million revenue in the previous corresponding period.
  
  For fiscal year ended October 31 2008, it posted a net loss of RM21.2 million on revenue of RM638.6 million, mainly due to the writeback of impairment loss in 2007

18th Sep 2009. Silver Bird announced its fy 2009 Q3 Earnings. It made some 331 thousand. (Not a lot eh?)

However, I was kind of amused with the following article published the next day.

• Saturday September 19, 2009
  
  Silver Bird Q3 profit up on lower costs
  
  KUALA LUMPUR: Silver Bird Group Bhd registered a pre-tax profit of RM330,000 for the third quarter ended July 31, compared with a pre-tax loss of RM5.56mil in the previous corresponding period.
  
  In an announcement on Bursa Malaysia, Silver Bird said the improved result was due to strong sales by its consumer food division and lower costs.
  
  It said pre-tax profit, however, declined 16% compared with the preceding quarter’s RM392,000 due to the promotional activities.
  
  Revenue fell to RM139.5mil from RM159.4mil mainly due to the 20% fall in revenue of multicom division (telecommunications business) from RM121mil to RM97mil on slowdown in the economy.
  
  The consumer food division’s revenue rose to RM42.9mil in the third quarter from RM38.6mil in the previous corresponding period due to strong market demand, it said.
  
  For the nine-month period, Silver Bird posted a pre-tax profit of RM825,000 compared with a pre-tax loss of RM22.56mil previously. Its revenue declined to RM444.7mil from RM476.3mil. — Bernama

As can be seen, Silver Bird does not have much earnings for OSK to play with. Hence I guess the much 'lowish earnings estimate' from OSK.

As you can see an EPS estimate of 1.6 million equates only an eps of 0.5 sen.

Yeah, an eps of 0.5 sen.

So how does OSK then value the stock?

LOL! They use PBV of 1.2x!

Justifiable?

:P2