MIDAS Valuations Projections

MIDAS is in the business of large-section aluminium alloy extrusion products and polyethylene pipes.

Return of Equity (ROE)	Net income/Equity
	Net income	Equity	ROE	ROE growth
2007	31,914	181,574	17.57630498	11.98320581
2006	25,567	162,894	15.69548295	-21.29386054
2005	18,322	91,877	19.94187882	2.14511304
2004	15,302	78,379	19.52308654	-82.91239343
2003	8,954	7,837	114.2529029
2002	7,019

ROE is >15%. Profitable company.

Net Profit Margin (NPM)	Net income/Revenue
	Net income	Revenue	NPM	NPM growth
2007	31,914	140,399	22.73093113	-6.857149094
2006	25,567	104,764	24.40437555	-6.131996613
2005	18,322	70,473	25.9986094	2.295404166
2004	15,302	60,208	25.41522721	-3.595847996
2003	8,954	33,964	26.3632081	-10.33354224
2002	7,019	23,873	29.40141583

NPM has been flat or even dropping which is not a good sign of competitiveness.

Liquidity
	Total Current Assets	Total Current Liabilities	Current ratio
2007	111,280	36,198	3.074202995
2006	103,241	38,978	2.648699266
2005	68,396	22,179	3.083818026
2004	67,666	23,688	2.856551841
2003	28,151	36,228	0.7770509

No liquidity problems.

Solvency
	Long Term Debt	Total Shareholder Equity	LT Debt/Equity Ratio
2007	2960	181,574	1.630189344
2006	2946	162,894	1.808538068
2005	2581	91,877	2.809190548
2004	2490	78,379	3.176871356
2003	23394	7,837	298.5070818

Little or negligible long term debt.

Free Cash Flow
	Net cash from operating activities	Capital expenditures	Free Cash Flow(FCF)	FCF/Revenue
2007	34,027	12723	21,304	15.17389725
2006	27,765	31668	-3,903	-3.725516399
2005	13,013	10029	2,984	4.23424574
2004	3,362	1503	1,859	3.087629551
2003	9,651	1830	7,821	23.02732305

They generated better free cash flow in 2007. However dividend payout ratio is only about 10% at best.

Not a bad set of numbers.

Let's look at valuation....

EPS Data	EPS	EPS growth
2007	3.78	18.86792453
2006	3.18	33.05439331
2005	2.39	4.366812227
2004	2.29	42.23602484
2003	1.61

EPS growth has been >15% for past 2 years, I use a EPS growth rate of 10%.

	Projected EPS at yr end
End year 1	4.158
End year 2	4.5738
End year 3	5.03118
End year 4	5.534298
End year 5	6.0877278
Total EPS for next 5 years	25.3850058

Current price of stock	0.96
Current EPS	0.0378
Current PE ratio	25.3968254

I use a future PE of 17 to calculate the price in 5 years time. Hence price based on EPS of 6.08 and PE of 17 in 5 years would be $1.03

Dividend payout ratio is about 10%. So for total EPS for next 5 years = 25.38 cents. Dividend = 2.53 cents.

Price based on dividend payout would be $0.925(current price) + $0.0253 = $0.95

Using a desired return rate of 5% dividend yield,

	Present price to pay for stock
Year 5	0.904761905
Year 4	0.861678005
Year 3	0.820645719
Year 2	0.781567351
Year 1	0.744349858

Present price to pay for stock should be $0.744 if I want 5% dividend yield.

FJ Benjamin valuations projection

FJ Benjamin is a high end luxury goods retailer.

I own 20 lots of this stock at an average of 0.6175.

Here are some figures :

Return of Equity (ROE)	Net income/Equity
	Net income	Equity	ROE	ROE growth
2007	21,468	198,614	10.80	1.85
2006	10,171	95,840	10.61	92.3
2005	4,262	77,249	5.51	108.7
2004	2021	76,466	2.64	34.32
2003	1517	77,098	1.96	-63.3
2002	3100	57,819	5.36

Not a high ROE business. They did have some impressive ROE growth between 2005 and 2006.

Net Profit Margin (NPM)	Net income/Revenue
	Net income	Revenue	NPM	NPM growth
2007	21,468	257,618	8.33	53.40
2006	10,171	187,235	5.43	85.65
2005	4,262	145,658	2.92	68.77
2004	2021	116,573	1.73	20.64
2003	1517	105,569	1.43	-47.55
2002	3100	113,147	2.73

It is also not a high NPM business.

Liquidity
	Total Current Assets	Total Current Liabilities	Current ratio
2007	251,050	102,003	2.46
2006	107,251	74,727	1.43
2005	73,557	57,538	1.27
2004	58,112	40,969	1.41
2003	56,490	40,287	1.40
2002	61,924	55,494	1.11

Solvency
	Long Term Debt	Total Shareholder Equity	LT Debt/Equity Ratio
2007	3104	198,614	1.56
2006	21210	95,840	22.13
2005	21634	77,249	28.0
2004	20242	76,466	26.47
2003	20984	77,098	27.21
2002	31702	57,819	54.82

FJ's has good cash position though. Little long term debt at present and current ratio is healthy.

Free Cash Flow
	Net cash from operating activities	Capital expenditures	Free Cash Flow(FCF)	FCF/Revenue
2007	-31,148	11945	-43,093	-16.72
2006	7,694	4107	3,587	1.91
2005	5,529	3396	2,133	1.46
2004	2,444	3128	-684	-0.58
2003	5,803	2147	3,656	3.46
2002	13,630	3235	10,395	9.18

It is interesting to note though that the free cash flow for FJ is not anything to crow about. So where is the cash coming from? I have to look into this further.

However EPS growth has been good.

EPS Data	EPS	EPS growth
Year 1	1.22
Year 2	0.53	-56.55
Year 3	0.71	33.96
Year 4	1.5	111.26
Year 5	3.53	135.33
Year 6	5.07	43.62

Assuming an EPS growth of 15% for the next 5 years,

	Projected EPS at yr end
End year 1	5.83
End year 2	6.70
End year 3	7.710
End year 4	8.86
End year 5	10.19

EPS at the end of next 5 years will be 10.19 cents.

If we use a PE of 10, the price of the stock in 5 years should be $1.02

Using dividend price valuations, we first find out what the dividend payout ratio is for the past few years.

	Dividend	EPS	Dividend payout ratio
2002	0.1	1.22	8.19
2003	0.25	0.53	47.16
2004	0.75	0.71	105.63
2005	1.1	1.5	73.33
2006	2.4	3.53	67.98
2007	3.5	5.07	69.03

A very impressive dividend payout ratio! However this is including the special dividends paid out. But it is worthwhile to note that they frequently pay out special dividends. In fact I did not include the 13 cents capital distribution they gave out last year.

Total EPS for next 5 years based on EPS growth of 15% is 39.31 cents. Assuming a modest 20% dividend payout ratio, the total dividend paid out over next 5 years is 7.86 cents.

Current price is $0.425. So price in 5 years based on dividends is $0.50

Present price to pay for stock Year 5 0.480 Year 4 0.462 Year 3 0.444 Year 2 0.427 Year 1 0.410

Hence discounted over the 5 years, if I buy the stock at 0.41 today, I will get a dividend yield of 4% over the next 5 years.

Current price of stock	0.425
Current EPS	0.0507
Current PE ratio	8.382642998

FJ Benjamin looks more like a dividend play. They have a strong cash position but their business does not seem to be very profitable. Strange combination.......

China Milk price valuations projections

Due to my upcoming holiday trip (flying off Wednesday 4 June) I had been taking a back seat in terms of trading. Hence I took the opportunity to read up on value investing. In future I will look to combine both value calculations and TA in my stock picks and decision making.

I've done some calculations for China Milk which I feel is a good company with a good business.

Return of Equity (ROE) = Net Income/Equity

	ROE	ROE growth
2008	26.42	-5.53
2007	27.973	1.00
2006	27.69

China Milk was listed on 13 March 2006. Hence the equity figures had increased after that resulting in a drop in ROE. However ROE rose to 16.6% from 2007. It is hard to look at the ROE at this stage due to the lack of a track record for the company after listing.


Net Profit Margin (NPM) Net income/Revenue

	NPM	NPM growth
2008	87.89	2.85
2007	85.46	-5.64
2006	90.57	2.23
2005	88.59

Net profit margin however is unaffected by listing. It is an extremely high NPM business!

Liquidity

	Current ratio
2008	14.9
2007	9.78
2006	24.8
2005	6.75

China Milk is extremely solvent. No liquidity problems definitely.

Solvency

	LT Debt/Equity Ratio
2008	52.4168215
2007	70.9722985
2006

On 5 January 2007, the Company issued a zero coupon convertible bonds due 2012 with an aggregate principal amount of uS$150,000,000. the convertible bonds were issued with a conversion price of S$2 per share and will mature on 5 January 2012. The yield for the bonds was 5.25%. How the management uses this money is important. The interest yield does not seem very high and if the money is invested well, this is good for the company despite the debt to equity ratio being relatively high.

Free Cash Flow

	Free Cash Flow(FCF)	FCF/Revenue
2008	94,228	17.2
2007	150,552	33.99
2006	160,004	53.15
2005	141,969	58.26

China Milk's FCF is good. FCF as revenue shows how much of the revenue is generated as cash and China Milk excels in this area. 2008's FCF was lower because management used the cash to invest in the milk processing plant for future growth.

Price valuation projection

EPS Data	EPS	EPS growth
2005	0.33
2006	0.41	24.24
2007	0.51	24.39
2008	0.58	13.72

Looking at the EPS growth, I would assume a 10% EPS growth over the next 5 years using current EPS of 0.58 RMB

	Projected EPS at yr end
End year 1	0.63
End year 2	0.70
End year 3	0.77
End year 4	0.84
End year 5	0.93

Currently 1SGD=5.1RMB

Hence projected EPS at end of next 5 years = SGD$0.18

Current price of stock is SGD$0.725
Latest EPS = SGD$0.11
P/E ratio = 6.6

Using a projected P/E ratio of 10, we would expect China Milk to be trading at $1.80 in 5 years time.

Price calculation based on dividend payout

Total EPS projected over next 5 years = SGD$0.76
Dividend payout ratio over past 4 years is about 9%
Hence dividend expected to be paid out over next 5 years = SGD$0.07
Future price in 5 years time based on dividend payout = $0.795

Assume dividend payout to keep up with inflation, use 5% desired return.

	Present price to pay for stock
Year 5	0.757
Year 4	0.721
Year 3	0.686
Year 2	0.654
Year 1	0.622

Desired price to buy China Milk would be SGD$0.622

At the current price of SGD$0.725 we would get a return of about 2% on projected dividend over the next 5 years

	Present price to pay for stock
Year 5	0.779
Year 4	0.764
Year 3	0.749
Year 2	0.734
Year 1	0.720

Overall the analysis from the figures show that China Milk is a profitable company with good ROE and excellent NPM.

I will read into the business itself in more detail but this is just a breakdown of the numbers which look quite good.