Duty Free Intl. Investors anyhow sell?

11 Jan 2018 20:36 - 11 Jan 2018 20:51 #24198 by divads

Duty free international has fixed deposit of around $2.8M SGD and $42M USD sitting in the bank.

Now, when ringgit is weak, the $2.8M SGD and $42M USD will translate to higher Ringgit so it is treated as profit as in 3Q 16. Profit of $9.572M Ringgit forex gain.

In Q3 17, ringgit rises. So the same $2.8M SGD and $42M USD will translate to lower Ringgit so it is treated as loss of $7.538M Ringgit.

The fact is the money is still there, the " loss" is a accounting treatment becos duty free reports in Ringgit , so the same amount of SGD and USD is still sitting in the bank but their value in terms of ringgit is lower. So this is an accounting treatment and it does not mean real loss.

Next. Minus away the Forex factor (which is variable becos ringgit can rise or drop.)

In 3Q/16, the " real" profit is $22.295M - $9.572M = $12.7M Ringgit (during 3Q/16, the exchange rate was 3.15RM = 1 SGD), so $12.7M ringgit = $4.03M SGD

In 3Q/17, the " real" profit is $4.577M + $7.538M = $12.1M Ringgit (during 3Q/17, the exchange rate is 3.02RM = 1SGD), so $12.1M ringgit = $4.01M SGD

So the real profit drop by a neglibible $0.6M ringgit only. BUT becos Ringgit rises, in terms of SGD, the profit in SGD term is considered the same.

I dunno why today the investors over react? Maybe BBs trying to scare those investors who do not know the real facts?
Last edit: 11 Jan 2018 20:51 by chanteik. Reason: Shortened the title

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12 Jan 2018 08:07 #24199 by divads
Duty Free International was listed as DFZ Capital in bursamalaysia and was bought over by Atlan I think in 2005 (if my memory serve me right) prior to 2011 listing in SGX, Attached is the dividends given out by them.
As u can see, even during Lehmen brothers 2008 to 2009, they were giving out dividends. So I dun think they have trouble giving out dividends in the long term , especially now they are cash rich and zero debt.

Information can be obtained from www.sgx.com and www.bursamalaysia.com

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12 Jan 2018 23:19 #24208 by sykn
Yah, I went in to pick up some more when the market fell out of love with DFI!

As value investors, our frame of reference should be the business' intrinsic value; not rumours that always go around to scare us.

If the market weren't so fickle, how to make money?

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15 Jan 2018 15:23 #24213 by divads

Maintain BUY

3QFY2/18 results were in-line but third interim net DPS of 10.0sen (YTD: 21.0sen) was above our estimate. Earnings growth was mainly held up by the duty free and property segments. Our FY18-20 earnings forecasts and MYR6.00 SOP-TP are intact.

Duty free segment largely stable

Excluding one-off items totalling to -MYR6.6m (i.e. forex loss, fair value gains), 3QFY18 core net profit was MYR8.2m (+13% YoY, +5% QoQ), bringing 9MFY18 core net profit to MYR27.4m (-11% YoY) and accounting for 69% of our full-year estimate. Results were within our estimate as we are anticipating seasonally stronger 4QFY18 earnings. YoY, 3QFY18’s core earnings were held up by (i) marginally higher revenue at the duty free segment due to better product and sales mix (i.e. at the airport and bordertown outlets), (ii) sustained profit at the property and hospitality segment. This, however, was partly offset by (iii) slower automotive profits due to higher material costs and maintenance expenses, and (iv) a higher effective tax rate of 32% (excluding one-offs; 3QFY17: 25%).

Earnings estimates unchanged

We maintain our core earnings forecasts. However, we raise our net profit payout forecast to 135% from 100% for FY18 but maintain our conservative FY19-20’s estimates at 100% p.a.. This results in FY18/19/20 net DPS of 21.0sen/16.1sen/16.6sen.

Partnership still positive

DFI’s partnership with Heinemann [via its wholly-owned subsidiary, Heinemann Asia Pacific (HAP)] has remained favourable and resulted in positive, synergistic impact in areas such as (i) transportation costs - down 63% YoY to MYR1.4m for 9MFY18, and (ii) inventory – down 23% YoY to MYR166m (end-3QFY18). We believe there are more operational potentials to be realised from the partnership which could translate into positive earnings impact.

Source: Maybank Research - 12 Jan 2018

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23 Jan 2018 10:03 #24237 by divads












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31 Jan 2018 02:26 #24246 by divads
A declining market may be blessing in disguise for duty free as investors now looking for more resilient and more defensive dividend stock and duty free should benefit. Afterall when market bull run , duty free never benefitted from a bull market as it is deemed too "boring". Now with market dropping, maybe is time for duty free as a high yielding defensive stock to shine.

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