POH KONG at a glance

 

POH KONG

 

Poh Kong - Return on Retained Earnings

Poh Kong
Year		DPS		EPS		Retained EPS
2004		1		8.5		7.5
2005		1.2		2.9		1.7
2006		1.2		5.3		4.1
2007		1.3		4.5		3.2
2008		1.4		7		5.6
2009		1.4		6.9		5.5
2010		1.4		8		6.6
2011		1.4		10		8.6
Total		10.3		53.1		42.8
2003-2011
EPS increase (sen)				1.5
DPO				19%
Return on retained earnings				4%
(Figures are in sens)

Investor's Checklist: Consumer Services

Most consumer services concepts fail in the long run, so any investment in a company in the speculative or aggressive growth stage of the business life cycle needs to be monitored more closely than the average stock investment.

Beware of stocks that have already priced in lofty growth expectations.  You can make money if you get in early enough, but you can also lose your shirt on the stock's rapid downslide.

The sector is rife with low switching costs.  Companies that establish store loyalty or store dependence are very attractive.  Tiffany's is a good example; it faces limited competition in the retail jewelery market.

Make sure to compare inventory and payables turns to determine which retailers are superior operators.  Companies that know what their customers want and how to exploit their negotiating power are more likely to make solid bets in the sector.

Keep an eye on those off-balance sheet obligations.   Many retailers have little or no debt on the books, but their overall financial health might not be that good.

Look for a buying opportunity when a solid company releases poor monthly or quarterly sales numbers.  Many investors overreact to one month's worth of bad same-store sales results, and the reason might just be bad weather or an overly difficult comparison to the prior-year period.  Focus on the fundamentals of the business and not the emotion of the stock.

Companies also tend to move in tandem when news comes out about the economy.  Look for a chance to pick up shares of a great retailer when the entire sector falls - keep that watch list handy.  


Ref:  The Five Rules for Successful Stock Investing by Pat Dorsey


Read also:
Investor's Checklist: A Guided Tour of the Market...

Poh Kong rises on Q2 profit gain

Poh Kong Holdings Bhd, a Malaysian jewelry maker, rose to the highest in almost six weeks in Kuala Lumpur trading after reporting a 27 per cent increase in second-quarter profit.

The stock climbed 3.4 per cent to 45.5 sen at 9:24 a.m. local time, set for its highest close since February 18. -- Bloomberg

Read more: Poh Kong rises on Q2 profit gain http://www.btimes.com.my/Current_News/BTIMES/articles/20110330094154/Article/index_html#ixzz1I3dnWd3C

Recent Financial Results

Announcement Date		Financial Yr. End		Qtr	Period End		Revenue RM '000		Profit/Lost RM'000		EPS		NPM
29-Mar-11		31-Jul-11		2	31-Jan-11		170,484		9,524		2.32		5.59%
06-Dec-10		31-Jul-11		1	31-Oct-10		169,451		10,885		2.65		6.42%
28-Sep-10		31-Jul-10		4	31-Jul-10		131,906		7,789		1.90		5.90%
28-Jun-10		31-Jul-10		3	30-Apr-10		132,737		6,470		1.58		4.87%

Company

Particulars

Date announced

Ex-Date

To those registered by

To be paid on

Total for yr so far

Total for prev yr

POHKONG	F & F Single Tier Exempt 1.4¢	06-Jan-11	09-Feb-11	11-Feb-11	09-Mar-11	1.4¢	1.4¢
	F & Final Single Tier 1.4¢TE	20-Jan-10	05-Feb-10	09-Feb-10	09-Mar-10	1.4¢	1.4¢
	First & Final 6¢	15-Jan-08	25-Jan-08	29-Jan-08	18-Feb-08	6¢	6¢
	First & Final 6¢	15-Jan-07	13-Feb-07	15-Feb-07	09-Mar-07	6¢	6¢
	First & Final 6¢	20-Jan-06	13-Feb-06	15-Feb-06	09-Mar-06	6¢	5¢
	First & Final 5¢	30-Dec-04	19-Jan-05	24-Jan-05	09-Mar-05	5¢	–

POH KONG

F & F 1.4¢ single tier TE

09-Jan-09

22-Jan-09

28-Jan-09

06-Mar-09

1.4¢

4.44¢

A Brief Look at Poh Kong

Poh Kong Holdings Berhad Company

Business Description:
Poh Kong Holdings Berhad is a Malaysia-based company engaged in investment holding and the provision of management services. Through its subsidiaries, the Company operates in three segments:

1. trading, which is engaged as suppliers and retailers of jewelries, precious stones and gold ornaments; 
2. manufacturing, which is engaged as a manufacturer and dealers of jewelries, precious stones and gold ornaments, and 
3. others, which includes investment holding. 

Its products are divided into two main categories: viz gold and gemset jewelries. The Company's jewelry products include Koleksi Anggun, Tranz collection, Angel collection, Diamond collection, Disney collection, Festival collection, Romance collection, Gold Bar collection and Impressionism. On October 14, 2009, through Poh Kong International Sdn Bhd, a wholly owned subsidiary, the Company had disposed off its equity interest in its subsidiary, Poh Kong Diamond Industry Limited. The Company's ultimate holding company is Poh Kong Sdn Bhd.

Current Price (7/1/2011): 0.51
2010 Sales 561,243,734
Employees: 1,047
Market Cap: 209,279,520
Shares Outstanding: 410,352,000
Closely Held Shares: N/A

2004 DPS 1.0 EPS 8.5
2005 DPS 1.2 EPS 2.9
2006 DPS 1.2 EPS 5.3
2007 DPS 1.3 EPS 4.5
2008 DPS 1.4 EPS 7.0
2009 DPS 1.4 EPS 6.9
2010 DPS 1.4 EPS 7.7
1Q11 DPS - EPS 2.65

Recent Financial Results

Announcement Date		Financial Yr. End		Qtr	Period End		Revenue RM '000		Profit/Lost RM'000		EPS		Amended
06-Dec-10		31-Jul-11		1	31-Oct-10		169,451		10,885		2.65		-
28-Sep-10		31-Jul-10		4	31-Jul-10		131,906		7,789		1.90		-
28-Jun-10		31-Jul-10		3	30-Apr-10		132,737		6,470		1.58		-
29-Mar-10		31-Jul-10		2	31-Jan-10		144,207		7,494		1.83		-

Estimated EPS for 2011 = ttm-EPS = 7.96 sen
Projected PE for 2011 = 51 / 7.96 = 6.4 x

Historical
5 Yr
PE range 5.0 - 9.5
DY range 4.5% - 2.5%

10 Yr
PE range 5.6 - 10.8
DY range 4.2% - 2.3%

Capital Changes & Dilution

2008 3/4 Bonus. 1 to 2 Share Split

One Year Performance of Selected Stocks in KLSE (3)

Poh Kong Holdings Berhad

Date announced 12-Jun-10
Quarter 31/10/2010 Qtr 1 FYE 31/07/2011

STOCK POHKONG C0DE  5080 

Price $ 0.47 Curr. PE (ttm) 5.90 Curr. DY 2.98%
LFY Div 1.40 DPO ratio 18%
ROE 10.2% PBT Margin 9.0% PAT Margin 6.4%

Rec. qRev 169451 q-q % chg 28% y-y% chq 11%
Rec qPbt 15191 q-q % chg 58% y-y% chq 11%
Rec. qEps 2.65 q-q % chg 39% y-y% chq 10%
ttm-Eps 7.96 q-q % chg 3% y-y% chq 17%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 6.00 Avg. L PE 5.20
Forecast High Pr 0.61 Forecast Low Pr 0.38 Recent Severe Low Pr 0.38

Current price is at Middle 1/3 of valuation zone.
RISK: Upside 61% Downside 39%
One Year Appreciation Potential 6% Avg. yield 4%
Avg. Total Annual Potential Return (over next 5 years) 10%

CPE/SPE 1.05 P/NTA 0.60 NTA 0.78 SPE 5.60 Rational Pr 0.45


Decision:
Already Owned: Buy Hold Sell Filed Review (future acq): Filed Discard: Filed
Guide: Valuation zones Lower 1/3 Buy Mid. 1/3 Maybe Upper 1/3 Sell

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr


Stock Data: Recent Stock Performance:
Current Price (11/19/2010): .49
(Figures in Malaysian Ringgits)
1 Week 10.2% 13 Weeks 11.5%
4 Weeks 19.8% 52 Weeks 16.9%

Poh Kong Holdings Berhad Key Data:
Ticker: POH KONG Country: MALAYSIA
Exchanges: KUL Major Industry: Apparel & Textiles
Sub Industry: Apparel Manufacturers

2010 Sales 561,242,000
(Year Ending Jan 2011).
Employees: 1,047

Currency: Malaysian Ringgits Market Cap: 199,020,720
Fiscal Yr Ends: July Shares Outstanding: 410,352,000
Share Type: Ordinary Closely Held Shares: N/A

Day's Range: 0.46 - 0.47
52wk Range: 0.35 - 0.51
Volume: 273,000

Poh Kong

Date announced 28/09/2010
Quarter 31/07/2010 Qtr 4 FYE 31/07/2010

STOCK POHKONG C0DE  5080 

Price $ 0.485 Curr. PE (ttm-Eps) 6.29 Curr. DY 2.89%
LFY Div 1.40 DPO ratio 18%
ROE 10.3% PBT Margin 7.3% PAT Margin 5.9%

Rec. qRev 131906 q-q % chg -1% y-y% chq 6%
Rec qPbt 9609 q-q % chg -1% y-y% chq -18%
Rec. qEps 1.90 q-q % chg 20% y-y% chq -15%
ttm-Eps 7.71 q-q % chg -4% y-y% chq 11%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 6.00 Avg. L PE 5.20
Forecast High Pr 0.59 Forecast Low Pr 0.41 Recent Severe Low Pr 0.41
Current price is at Middle 1/3 of valuation zone.

RISK: Upside 58% Downside 42%
One Year Appreciation Potential 4% Avg. yield 4%
Avg. Total Annual Potential Return (over next 5 years) 8%

CPE/SPE 1.12 P/NTA 0.65 NTA 0.75 SPE 5.60 Rational Pr 0.43



Decision:
Already Owned: Buy Hold Sell Filed Review (future acq): Filed Discard: Filed
Guide: Valuation zones Lower 1/3 Buy Mid. 1/3 Maybe Upper 1/3 Sell

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

Poh Kong Annual Report 2009: Chairman's Statement

Main Points:

The Group opened eight new outlets in various urban and suburban mega malls in FYE2009.  The Company has a total of 95 retail outlets nationwide.

Poh Kong’s higher revenue was attributed to additional revenue from new stores together with like-for-like growth in existing stores, as well as higher sales of diamonds and gem-based jewellery from existing stores.

Poh Kong’s inventory comprising of gold and gems, notwithstanding the outlets expansion, have decreased from RM391.3 million in FYE2008 to RM356.7 million in FYE2009 due to efficiencies in stock control. 

 As at 31 July 2009, the Group’s net assets recorded an increase of RM22.6 million at RM283.7 million over the previous year of RM261.1 million.

----

95 outlets


2009 Revenue: RM 541.636 m
Average Revenue per outlet: RM 5.701 m per year or RM 475,000 m per month


2009 PBT:  RM 38.558 m
Average PBT per outlet: MR 405,874 per year or MR 33,823 per month


2009 PAT: RM  28.420 m
Average PAT per outlet: MR 299,158 per year or MR 24,930 per month


2009 Inventories:  RM 356.7 m
Average Inventories per outlet:  MR 3.755 m


----


Chairman’s STATEMENT

Dear Valued Shareholders,

On behalf of the Board of Directors (“Board”) of Poh Kong Holdings Berhad (“the Company” or “PKHB”), I am pleased to present the Annual Report and Audited Financial Statements of the Company and its subsidiaries (“the Group”) for the financial year ended 31 July 2009 (“FYE 2009”).

Economic and Business Overview
The Malaysia’s economy registered a lower growth of 4.6% in 2008 compared to 6.3% in the previous year. GDP growth was close to negative territory in the fourth quarter of 2008 at 0.1%. In 2009, the global economy was largely affected by the financial crisis and economic recession which emanated in the US and Europe on a scale that was unprecedented. As asset prices fell and global demand plunged, developing economies were impacted by the fallout.

In the first quarter of 2009, the Malaysian economy contracted by 6.2% due largely to a drop in external demand and exports as advanced countries had to contend with a deepening recession. The country’s  economy contracted to a slower 3.9% in the second quarter of 2009 and in the third quarter, the economy contracted to a smaller 1.2% mainly due to a decline in the manufacturing sector but it was reported that the worst was over for the economy.*

Notwitstanding the various uncertainties, the global and domestic economies are expected to register modest growth in 2010. In Malaysia, this is mainly due to the Government’s earlier stimulus spending packages totalling RM67 billion, unveiled in November 2008 (RM7 billion) and March 2009 (RM60 billion), which are having positive impact on the economy.

Supported by the domestic demand, stabilization and the fiscal stimulus packages designed to lessen the impact of a global recession, the Government is confident of achieving a 5% GDP growth in 2010. In announcing this on November 18, 2009, YB Tan Sri Nor Mohamed Yakcop, Minister in the Prime Minister’s Department, said the Government had no plans to introduce additional stimulus package to boost the economy as it was in the process of formulating the 10th Malaysian Plan and a new economic model.**

According to Retail Group Malaysia (RGM) which tabulates retail data, spending in the retail industry in Malaysia was expected to grow marginally between 1% and 3% by the end of 2009 in view of the sluggish economic conditions.***

This posed challenging times for malls and retailers of luxury goods which have gone through one of the toughest ever operating environment.

However, RGM is more optimistic next year and projects annual retail sales growth at about 5% in 2010.
In this context, Poh Kong remains committed to the luxury retail sector and has put in more focus on promotions of its products to further enhance sales of its jewellery.

Shopping malls and retailers have geared up for the Malaysia Year End Sale (MYES) campaign, a much anticipated celebration of shopping, dining and entertainment from Nov 21 to Jan 3, 2010. This campaign aimed at promoting domestic and tourist shopping regionally, would benefit the Group in jewellery retail sales.

Sources:
* Reported in The Edge online “Malaysia Q3 GDP shrinks less than expected”, 20 Nov 2009
** Reported in StarBiz, “No plan for additional stimulus package”, 19 Nov 2009, Page 5
*** Reported in StarBiz, “Retail industry still growing despite slowdown” 19 October 2009, Page 6

Review of Financial Performance

The Poh Kong Group achieved an increase of 6.34% in revenue of RM541.6 million in its financial year ended 31 July 2009 (FYE2009) compared with RM509.3 million for its previous financial year (FYE2008). This is an increment of RM32.3 million in sales revenue.

Poh Kong’s higher revenue was attributed to additional revenue from new stores together with like-for-like growth in existing stores, as well as higher sales of diamonds and gem-based jewellery from existing stores.


The Group opened eight new outlets in various urban and suburban mega malls in FYE2009. Poh Kong’s inventory comprising of gold and gems, notwithstanding the outlets expansion, have decreased from RM391.3 million in FYE2008 to RM356.7 million in FYE2009 due to efficiencies in stock control.  Profit before taxation stood at RM38.6 million for the FYE 2009 or a marginal decrease of RM1.4 million or a 3.5% decline against RM40 million for its FYE2008. The decrease in profit before tax was mainly due to thinner profit margins from having purchased gold at higher prices and increased initial operating costs associated with the opening of new outlets.

Based in terms of the number of outlets, the Group is the largest jewellery retail chain store in Malaysia, and the market leader nationwide (RAM Ratings Report, November 2009). Gold jewellery remains Poh Kong’s main revenue contributor although the Group has stepped up the sales of diamonds and gems in its advertising and promotions campaigns. The branding strategy of these stores have been adopted so that the Company
becomes less dependant on its traditional yellow gold jewellery.  As at 31 July 2009, the Group’s net assets recorded an increase of RM22.6 million at RM283.7 million over the previous year of RM261.1 million.

Retailing and Marketing Support
Besides Poh Kong stores as the top line contributor to total sales revenue, the Group has broaden its range of non-yellow gold jewellery via alternate brands, namely Tranz and Walt Disney Collections. The Company currently operates specialty brands and retail concept stores, such as Diamond Boutique, Diamond & Gold, Jade Gallery, Poh Kong Gallery, Oro Bianco white gold jewellery, and Schoeffel boutique, as well as the Schoeffel Time Collection, a range of fine watches from Germany. At Poh Kong, we are committed to brand building and will continue to invest in branding as a long-term investment in our luxury fashion retailing business.

The Group also represents exclusive designer jewellery brands from international houses, such as Alessandro Fanfani, Angel Diamonds, Lapplesite Collection, Luca Carati, Rodney Rayner, SunDay and Verdi Gioielli. These brands are mainly from European countries, such as the United Kingdom, Germany and Italy. From exquisite pieces to simple elegant designs, from irresistible collections to dazzling custom-made orders, Poh Kong has just the right jewellery for every occasion. The Group’s marketing mix continues to place strong emphasis and commitment on design, craftsmanship, reputation, premium quality and competitive pricing.

For marketing support, intensified efforts in advertising, merchandising and implementing various product launches, sponsorships, road shows and promotions over the year will help to maintain the Group’s leading position.

These effort included the Miss Poh Kong Glamour/ Miss Tourism International Pageant World Final 2008 beauty parade held at the Sunway Pyramid Shopping Mall in December. We plan to continue the Miss Poh Kong Glamour 2009 sponsorship in conjunction with the opening of an upcoming outlet in Malacca in December.

In June, we launched one of Italy’s oldest and most prestigious jewellery brand Luca Carati and commemorated Poh Kong as the sole distributor in Malaysia. Poh Kong’s co-sponsored the Mary Search for Celebrities, a popular cable TV programme to unearth talents in Malaysia to star in the Jia Yu family entertainment channel on Astro 304 in September. Road shows for this talent search were organized during preliminary rounds in Penang, Ipoh, Klang Valley and Johore Bahru with the grand finals held in Kuala Lumpur. Several jewellery road shows were organized to coincide with the Hari Raya Puasa and UMNO General Assembly in Kuala Lumpur from August to October. In October, Poh Kong featured two of its labels, Schoeffel pearls from Germany and Luca Carati diamonds from Italy, and held a jewellery show at the “Fashion on the Turf” Ladies Day event in the Selangor Turf Club. Poh Kong and Schoeffel also presented the new line of ready-to-wear Schoeffel pieces for the Autumn-Winter Collection 2009/2010 to a group of patrons and guests at the Hilton Kuala Lumpur in November.

Branding & The Customer Experience
Poh Kong has been spending considerable time and capital in brand building which has paid off over the years. The Group has promoted its brands to become one of the most recognised jewellery brands nationwide. Our specialty brands and retail concept stores not only stands out distinctly for our renowned
yellow gold but also for the finest quality in jewellery, be it pearls, jade, gold, diamonds or gem stones.
The customer’s experience and brand’s advertising are the two most critical elements that go into the building of our successful brands. The advertising of our specialty brands and retail concept stores are often remembered, being the first point of contact with our customers, and that sets the stage for the brand’s promise. It is the customer experience that ultimately delivers the promise in our branding.

Poh Kong continues to deliver the customer’s experience through our brands and products at our stores that’s high-end, accessible and affordable. At the end of the day, we believe our customers will look for chic products at the right price points and mix to complement their individual lifestyle.

Corporate Social Responsibility
The initiatives of Corporate Social Responsibility (CSR) have been an integral part of the Group’s social objectives. This means integrating CSR activities into our workplace, our market place, our community and our environment. The Group’s CSR activities are highlighted on a separate page in this Annual Report.

Future Prospects
The Board expects FYE 2010 to pose stiffer competitive challenges than before and remains cautious of the current economic conditions and weakness in consumer demand.

In response to this general trading environment, the Group has taken a more prudent approach in major capital expenditures and implemented cost control initiatives. It will continue to place emphasis on achieving higher productivity and improve operational efficiency for the Group’s divisions. Poh Kong’s management plans to continue its drive to build market share by enhancing and differentiating its product offerings to its targeted market segments. The Company is actively evaluating various initiatives and opportunities to attract new customers through the introduction of new product lines, designs andenhanced customer service.

The Company has a total of 95 retail outlets nationwide and will identify strategic locations for outlets across the country which have the potential for higher revenue growth and consumer demand.  Moving forward, the Group will continue to expand outlets at a more moderate pace in view of the softer economic conditions and will invest on the refurbishment of existing stores.

With the current economic environment, Poh Kong does not expect to record any significant momentum in sales growth in the fourth quarter 2009 and first quarter 2010.  However, the Group is optimistic on its retail sales due mainly to the festive seasons and its loyal customers who buy gold-based jewellery as a long-term investment and as an alternative to term deposits or as a hedge against inflation.

Barring unforeseen circumstances, the Board remains positive on the performance of the Group for the FYE 2010.

Earnings Per Share
The basic earnings per share for the financial year ended 31 July 2009 stands at 6.93 sen (2008: 6.99 sen).

Dividend
The Board is pleased to recommend a first and final single tier tax exempt dividend of 1.40 sen per ordinary share of RM0.50 each in respect of the financial year ended 31 July 2009 (2008 : 1.40 sen single tier tax exempt per ordinary share of RM0.50 each). The proposed dividend is subject to shareholders’ approval at the 7th Annual General Meeting to be held on 20 January 2010.

Acknowledgements
On behalf of the Board of Directors, I would like to record our appreciation to Mr Choon Yee Fook who has resigned as an Executive Director of the Board during the course of the year. We are also pleased to welcome Datin Shirley Yue Shou How as our new Independent Non-Executive Director of the Board.
I would like to express my utmost and sincere appreciation to all my fellow Board Directors for their counsel and support during the course of the year. To the Management and Staff, thank you for your conscientious efforts, commitment, dedication and contributions towards the Group.

We are also grateful to our shareholders for their confidence, valued customers, business partners, Government authorities, financiers and suppliers for their continued support and cooperation in the
Group.

DATO’ CHOON YEE SEIONG
Executive Chairman & Group Managing Director
16 December 2009


Source:
Annual Report of  Poh Kong:
http://announcements.bursamalaysia.com/EDMS/subweb.nsf/7f04516f8098680348256c6f0017a6bf/ad831d76bbe08151482576950032bfe5/$FILE/POHKONG-Cover%20to%20Page%2014%20(2.5MB).pdf

http://announcements.bursamalaysia.com/EDMS/subweb.nsf/7f04516f8098680348256c6f0017a6bf/ad831d76bbe08151482576950032bfe5/$FILE/POHKONG-Page%2015%20to%20ProxyForm%20(2.6MB).pdf

Is Poh Kong a Great, Good or Gruesome Stock? Is it Undervalued, Fair price or High price?

There is a rising trend in its EPS.  However, earnings are rather cyclical, as evidenced by its ups and downs.
Poh Kong has grown its revenue and earnings through opening new outlets.  Its SSS figures are probably stagnant (this need to be confirmed).  It has acquired a lot of debt in growing to its present size.  Though its recent CFO and FCF are strongly positive, its FCF will mainly be used for paying down its debt and reinvesting into new stores.  Its DPO is in the region of 20% of its earnings and its DPS has increased little if any over the years.

Its ROE in 2009 was 10.05%.

Is Poh Kong a Great, Good or Gruesome stock?
Not a Great stock.  Perhaps more a Good stock rather than a Gruesome stock.

So,  perhaps it is better to skip this stock and search for another.

But then, let's look at the fundamentals of Poh Kong.

http://spreadsheets.google.com/pub?key=tx8wcqGqfTVH8s7RRSy-19g&output=html

What should be its intrinsic value?  Note in particular, its net working capital minus total debt owed equals RM 146 m.

At a price of 39 cents, its market cap is RM 160 m.

Therefore, effectively, the investor is buying the whole business of Poh Kong for RM 14 m.

Is Poh Kong not undervalued?  Severely undervalued?

Moreover, owning this stock gives you a DY of 3.6%.  Given its strong FCF, this dividend level can probably be sustained and this should protect the downside of your investment dollar.  Therefore, the upside reward/downside risk ratio is also favourable.

Disclaimer:  Please invest based on your own assessment and decision.  Always do your own homework.

Also read:

What are value traps?

5 Value Traps to Avoid Right Now

 I’m all for buying stocks on the cheap.  But there’s a catch: We’re only interested in good values if they also happen to be great businesses, companies with years of exceptional performance behind and ahead of them. And, of course, ones that pay us to wait for our thesis to play out.


and this:
Understanding  "Value Trap"

Poh Kong 19.10.2009

Valuation
http://spreadsheets.google.com/pub?key=th6Y8kWFmNXekgYj_wo6byA&output=html

This is a challenging time for the gold retailers.  With gold price going upwards, the prices of their products are higher.  This will reduce the demand for these discretionary products.  The inventories sold will have to be replaced by new inventories bought at higher prices.  There is also the risk of price fluctuations.  The gold price can goes up as well as down.  These retailers will also have to hedge against these fluctuations.  If they got this right, there is exceptional gain.  On the other hand, a wrong bet can be a costly affair indeed, especially for those with little working capital.

POH KONG

# POH KONG HOLDINGS BHD posted a lower pre-tax profit of RM6.798 million in the third quarter ended April 30, 2009, compared to RM12.816 million a year before. Revenue fell to RM121.3 million from RM124.236 million previously.