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Wednesday, December 30, 2015

(SuperMan 99) Cycle & Carriage Bintang (CCB) - The Forgotten Star with 73% potential upside!!!

I have been following Cycle & Carriage Bintang Bhd (CCB: 2925.kl) & decided to accumulate this stock quietly... :)

The reasons I invested in this company were as follows:

1. Revenue increased 86%
2. Profit increased 493%
3. PE will be below 6 with 2015 EPS projected at RM0.55
4. Net profit margin improved
5. Newly launched models are warmly welcome by market
6. New models are now produced locally in Malaysia & are complied with National Automotive Policy, so now can sell at lower prices (see press release @ 8/10/2015 below)
7. Hybrid version selling like hot cake due to tax exempted status (New hybrid S-400 is selling RM588k only, previous normal S-Class is about RM750k-850k with tax & C-Class is selling RM248,888 while previous year was RM300k++, please correct if wrong)
8. History of declaring special dividends.
(All profits in accounts were genuine operating profits, no gain on forex or fair value in investment properties, OR disposal of something)
Based on my own calculation, my price target for Cycle & Carriage is RM5.50 (refer to Table 1 below), representing potential upside of 73% (To be conservative, I discounted the IV).
Reminder: My calculation & assumptions may be wrong & I have to confess that I am not professional analyst, you are freely to disagree my projection. My presentation here are merely for sharing, educational & reference purposes only.

History of Declaring Special Dividends

The Company is in the mutured retailing business & do not require much capital expenditure/reinvestment except for normal refurbishment/upgrade of existing 3S centres. As such, the Company had declared special dividends in 2008 & 2009 when they were in good cash positions & performing years. (Refer to Table 3: declaring 108m in 2008 & 98m in 2009)
The company had only declared normal dividends other years & the company had stopped paying dividends in 2013 & 2014 due to weak operating results. (Note: there were times when BMW all models were selling like nobody & MBenz models were badly designed)
Entitlement Date = 29/8/2008
Special Dividend of 
RM1.35 per share (2007: nil) less income tax of 26% (
Entitlement Date = 28/8/2009
Special Dividend of RM1.20 per share less income tax of 25% (2008: RM1.35 per share less income tax of 26%) (
Note: Some said the above special dividends were results of restructuring exercises, these statements were baseless & totally wrong. If read 2008 & 2009 Annual Reports carefully, the dividends were in fact results of good financial performances by the Company.

Table 1: 6 years average & Price Target 

Rolling PE ratios for other cars distributors:
UMW Holdings (Toyota) : 26.59
Tan Chong Motor (Nissan) : 21.82
Berjaya Auto (Mazda) : 9.88
MBMR (Produa) : 8.82

Table 2: Comparison on 3Q2015 & 3Q2014

Brief Analysis:
1. Stocks level went up in tandem with the increase of revenue, correspondingly the trade payable increased & the company utilised bankers' acceptances to finance the purchase of new stocks.
2. Whole year projected profit = 41.931m + 13.461m (assuming Q4 same result as Q3) = 55.392m.
3. Earning per share = 55.392m / 100.745m = 0.5498

Table 3: Financial information based past 8 years' audited accounts


Recommended Links:

1. Press release (8/10/2015): Mercedes-Benz Malaysia enjoy 70% growth up to September 2015
In the prese release dated 8 October 2015, Mercedes-Benz Malaysia announced the achievement of 70 per cent growth in year-to-date passenger car sales, selling 8,196 units in 2015.
Mercedes-Benz Malaysia, President and CEO, Dr Claus Weidner said, “We have had a string of successes and achieved several milestones in 2015. With what we have achieved so far, Mercedes-Benz Malaysia is certainly headed towards another top year for the brand. With a constant evaluation of the market, our existing line of passenger cars, and upcoming products, 2016 is shaping up to be an exciting year ahead.”  
2. Press release (23/4/2015):  Successful launch of locally assembled all-new C-Class
"With the introduction of C-Class as locally assembled models, we believe that we have firmly cemented our position as the leading premium luxury brand for passenger cars in Malaysia"...

Declaration & Disclaimers:

I have interest & own shares in this company.
All the above are merely presented & written for sharing, educational & reference purposes and does not constitute as recommendation to purchase/buy or sell. You should make your investing decision based on your own judgement & at your own risk. I will not be responsible nor liable for your action.

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