Dairy Farm International – What really matters in a Stock? (IKEA/7-11/GIANT/COLDSTORAGE/GUARDIAN/GNC)

The more the better?? The bigger the better?? The more expensive the better?

6,500 Outlets / 180k Staffs / leading pan-Asian retailer / Member of Jardine Matheson Group / Founded in 1886

Comparison will be done with OLAM (O32)

1)  IDENTIFICATION OF COMPANIES THAT ARE UNDERVALUED.

  • Price to book ratio : 7.028 (702.8% Above fair value) O32 – 1
  • Price to earning ratio : 23.587 ( Below industry standard – 43.39)  O32 – 16.855

2)  LEARN ABOUT THEIR NUMBERS

  • Debt To Equity : 64.08% | 256%
  • Growth Performance : -0.65%| -Not given-
  • Dividend Yield : 2.66%[ 5 years] | 2.59% [ 5 years]
  • Current Ratio : 0.583 (5 years record of LOW current ratio)| 1.69
  • Book Value per share : 1.11 | 2.02
  • Cash Flow per share : 0.505 | 0.2556
  • Below average management ability ( Poor dividend growth | Weak net income/gross profit margin | overall Negative cash flow)Screen Shot 2017-06-19 at 11.41.27 amScreen Shot 2017-06-19 at 11.41.20 am

3) TECHNICAL ANALYSIS
Screen Shot 2017-06-19 at 11.49.53 am.jpg

Current stock price is still trending bearishly after its 14 year bull trend breakout.  Market has since been making lower low and lower high and may have just formed a Head and Shoulder pattern recently. A current long entry will have a 0.71 RR. Technically, Stock price requires high demand for it to break key level (Red line) to continue the bull trend ; making current bear trend a retracement.

4) Would I be vested into it?

No! it’s just another “familiar brand” hype

Fundamentally:

  • Highly overvalued (Still growing below industry standard)
  • Negative cashflow (16 x of it’s price) / Negative grow/ Poor CR

Technically:

  • Market still has bearish trend characteristics
  • RR ratio is poor for an entry

“+1 Knowledge point”

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2 thoughts on “Dairy Farm International – What really matters in a Stock? (IKEA/7-11/GIANT/COLDSTORAGE/GUARDIAN/GNC)

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