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Thursday, September 3, 2009

Value Buy Pan Malaysia Corporation

Pan Malaysia Corporation Berhad, an investment holding company, engages in manufacturing, marketing and distributing confectionery, and cocoa-based and other food products primarily in Malaysia, Australia, Singapore, and Hong Kong. It also involves in operating departmental and specialty stores, and property investment activities. The company is based in Kuala Lumpur, Malaysia.

PMCORP is in the process of restructuring.Recently,it posted a positive net income compared to losses in the last few year.the attraction of PMCORP comes from its assets. Its book value is at around RM 0.45/share.This gives a safety margin of over 50% at current price of RM 0.135.

PMCORP has come a long way to 'cut some of its rottenning poisoned limbs'. It has let go subsidiaries which are loss making and focus on its profit making businesses such as retail and manufacturing. So,PMCORP does not need to consolidate any losses and will be able to report good profit.

A few good points on PMCORP:

a) The cash level is at RM 127 mil while total liabilities is at RM 54 mil.This means by paying off its liabilities,investors will own some of the assets (properties,businesses,subsiadiaries and fixed assets) at half the value plus a clean balance sheet.

b) Expected to post cumulative earning per share of RM 0.013. At current price of RM 0.135, its forward P/E is 10x

c) It's a closely held company

Since it is in black now,PMCORP should be trading at around its Net Asset per share. PMCORP is a classic story of a frog turning into a prince.

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