From the above chart:
The EPS has grown from less than 10 sen to 40 sen since 2005. (3x)
Its dividend has increased from less than 5 sen to above 10 sen since 2005. (2x)
It share price has increased from about RM 1 to just below RM 4 since 2005. (3x)
Financial strength: Excellent
Its PE is about 10.
Share price is RM 3.49 per share.
Its annualised EPS is 49.59 sen (est.)
Its dividend yield is 3.44%.
Its P/B is 1.9
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From the above chart:
The EPS has grown from negative 5 sen to just below 25 sen since 2005. (5x)
Its dividend has increased from just above 0 sen to about 5 sen since 2005. (2x)
It share price has increased from just above RM 0.50 to RM 1 since 2005. (2x)
Financial strength: Good
Financial strength: Good
Its PE is about 4.
Share price is MR 1.09 per share.
Its annualised EPS is 37.29 sen (est.)
Its dividend yield is 7.64%.
Its P/B is 0.49
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The growth in EPS of Padini is due to its increasing revenue over the years.
The growth in EPS of Hing Yiap is due to its better profit margins with little increase in its top line revenue.
Padini is trading at higher P/E and higher P/B ratio compared with Hing Yiap.
Which company will grow its EPS at a faster rate in the future?
Which company will give a higher total shareholder return in the next 2 to 5 years?
Which company will you choose to invest into?
Would you invest into these companies today or wait for a more opportune time?
My subjective assessment:
Quality: Padini > Hing Yiap
Management: Padini (Great) > Hing Yiap (Good)
Value: Padini is anticipated to grow its EPS at faster rate, therefore, it is not a surprise that its P/E is higher. Hing Yiap may surprise on the upside, but it will need to be monitored.
My subjective assessment:
Quality: Padini > Hing Yiap
Management: Padini (Great) > Hing Yiap (Good)
Value: Padini is anticipated to grow its EPS at faster rate, therefore, it is not a surprise that its P/E is higher. Hing Yiap may surprise on the upside, but it will need to be monitored.
1 comment:
Hi BB,Thanks for your explanations of Padini Vs Hing Yiap. Your writeup is comprehensive and I agree with most of them. Padini has definitely done better in total return to shareholders in the past. If one bought Padini at about RM 0.90 5 years ago and keep to todate, his internal rate of return (IRR) with today's price of RM 3.60 and all the dividends will be 37%! Hing Yiap bought at 65 sen then and keep to todate will yield an IRR of 20%, still very good but pale in comparison with Padini. The good performance of Padini in its growth in revenue, earnings (Hing Yap has infact much higher CAGR in earnings but poor in revenue), dividends and excellent management efficiency earns the company a much better valuation of PER of 7, twice that of Hing Yiap. This is precisely which I think will provide HY with more superior return than Padini, in the next 5 years. Consider the followings to derive the present value and IRR for the cash flows in the next 5 years for Padini and HY:
Present share price of 3.6 Vs 1.15
Present dividend of 13.5 Vs 10 sen
Dividend growth of 23% Vs 18% (half of past 5 years)
Earnings growth of 12% Vs 8.4%, half of past 5 years for Padini but use growth in equity for HY as HY's CAGR in earnings is too big (77%).
Discount rate at 12%
Future PER of 10 and 8
The present value of Padini and HY will be RM 5.84 (+160%) and RM 3.00 (+260%)and IRR of 24% and 39% respectively. Hence I think Hing Yiap should provide a better return than Padini in the future because Padini as it is now is ovepriced in relation to HY.
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