Latest news with #KawanFoodBerhad
Yahoo
29-05-2025
- Business
- Yahoo
Estimating The Fair Value Of Kawan Food Berhad (KLSE:KAWAN)
Kawan Food Berhad's estimated fair value is RM1.58 based on 2 Stage Free Cash Flow to Equity Kawan Food Berhad's RM1.30 share price indicates it is trading at similar levels as its fair value estimate Kawan Food Berhad's peers are currently trading at a premium of 148% on average Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Kawan Food Berhad (KLSE:KAWAN) as an investment opportunity by estimating the company's future cash flows and discounting them to their present value. This will be done using the Discounted Cash Flow (DCF) model. Believe it or not, it's not too difficult to follow, as you'll see from our example! We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To start off with, we need to estimate the next ten years of cash flows. Seeing as no analyst estimates of free cash flow are available to us, we have extrapolate the previous free cash flow (FCF) from the company's last reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (MYR, Millions) RM31.3m RM30.2m RM29.7m RM29.7m RM30.0m RM30.6m RM31.3m RM32.2m RM33.2m RM34.2m Growth Rate Estimate Source Est @ -6.93% Est @ -3.76% Est @ -1.54% Est @ 0.01% Est @ 1.10% Est @ 1.86% Est @ 2.40% Est @ 2.77% Est @ 3.03% Est @ 3.21% Present Value (MYR, Millions) Discounted @ 8.4% RM28.9 RM25.7 RM23.3 RM21.5 RM20.1 RM18.9 RM17.8 RM16.9 RM16.1 RM15.3 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = RM204m The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 3.6%. We discount the terminal cash flows to today's value at a cost of equity of 8.4%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = RM34m× (1 + 3.6%) ÷ (8.4%– 3.6%) = RM748m Present Value of Terminal Value (PVTV)= TV / (1 + r)10= RM748m÷ ( 1 + 8.4%)10= RM334m The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is RM539m. The last step is to then divide the equity value by the number of shares outstanding. Compared to the current share price of RM1.3, the company appears about fair value at a 18% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Kawan Food Berhad as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.4%, which is based on a levered beta of 0.800. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. View our latest analysis for Kawan Food Berhad Strength Debt is not viewed as a risk. Dividend is in the top 25% of dividend payers in the market. Weakness Earnings declined over the past year. Opportunity Annual earnings are forecast to grow faster than the Malaysian market. Current share price is below our estimate of fair value. Threat Dividends are not covered by earnings and cashflows. Valuation is only one side of the coin in terms of building your investment thesis, and it ideally won't be the sole piece of analysis you scrutinize for a company. It's not possible to obtain a foolproof valuation with a DCF model. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. For Kawan Food Berhad, there are three fundamental items you should further examine: Risks: Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Kawan Food Berhad , and understanding this should be part of your investment process. Future Earnings: How does KAWAN's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the KLSE every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
BusinessToday
27-05-2025
- Business
- BusinessToday
Kawan Food's 1Q Profit Declines By 50%, Hit By Poor Export Sales And FX Loss
Kawan Food Berhad announced its first quarter results for the financial period ended 31 March 2025 reporting a year-on-year decline in revenue, mainly due to softer demand in export markets and currency fluctuations. Nonetheless, domestic performance remained encouraging, and regional markets such as Europe and Oceania delivered steady contributions. The Group reported revenue of RM70.5 million in Q1FY25, a 12.6% decrease compared to RM80.6 million in the same quarter last year. The contraction was primarily attributed to reduced sales in the Group's major export markets, particularly North America and China, as well as an unfavourable foreign exchange environment caused by the depreciation of the US Dollar against the Malaysian Ringgit. Profit after ta stood at RM4.7 million, down from RM9.2 million in Q1FY24, largely due to reduced export sales volume and unrealised foreign exchange losses. However, underlying demand remains stable, particularly in the domestic market. Malaysia continues to be the Group's largest revenue contributor, accounting for RM44.1 million or 62.6% of total revenue. This was followed by North America at RM8.6 million (12.2%), Europe at RM8.4 million (11.8%), and the remainder contributed by other regions including the Rest of Asia, Oceania, and Africa. Malaysia recorded a 9.7% year-on-year increase in revenue, supporting steady domestic demand for convenient and quality frozen food options. Europe and Oceania also registered growth of 10.9% and 13.7% respectively, contributing to the Group's overall performance across its key regional markets. The Group expects short-term margin pressure to persist due to ongoing geopolitical tensions and rising costs but remains optimistic about the medium to long-term outlook. Strategic initiatives are underway to deepen market penetration, enhance product innovation, and strengthen supply chain resilience to better serve both domestic and export markets. Related
Yahoo
30-04-2025
- Business
- Yahoo
Institutional investors own a significant stake of 48% in Kawan Food Berhad (KLSE:KAWAN)
Given the large stake in the stock by institutions, Kawan Food Berhad's stock price might be vulnerable to their trading decisions The top 2 shareholders own 55% of the company 37% of Kawan Food Berhad is held by insiders We've discovered 1 warning sign about Kawan Food Berhad. View them for free. A look at the shareholders of Kawan Food Berhad (KLSE:KAWAN) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 48% ownership. Put another way, the group faces the maximum upside potential (or downside risk). Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait. In the chart below, we zoom in on the different ownership groups of Kawan Food Berhad. Check out our latest analysis for Kawan Food Berhad Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index. We can see that Kawan Food Berhad does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Kawan Food Berhad, (below). Of course, keep in mind that there are other factors to consider, too. Kawan Food Berhad is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Gfg Foundation, Endowment Arm with 37% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 18% and 7.3%, of the shares outstanding, respectively. After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions. While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track. The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO. Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group. It seems insiders own a significant proportion of Kawan Food Berhad. It has a market capitalization of just RM469m, and insiders have RM172m worth of shares in their own names. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling. With a 15% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Kawan Food Berhad. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders. I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example - Kawan Food Berhad has 1 warning sign we think you should be aware of. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future. NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
21-02-2025
- Business
- Yahoo
Kawan Food Berhad's (KLSE:KAWAN) Stock Has Shown Weakness Lately But Financial Prospects Look Decent: Is The Market Wrong?
With its stock down 6.0% over the past three months, it is easy to disregard Kawan Food Berhad (KLSE:KAWAN). However, the company's fundamentals look pretty decent, and long-term financials are usually aligned with future market price movements. Particularly, we will be paying attention to Kawan Food Berhad's ROE today. Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors' money. In short, ROE shows the profit each dollar generates with respect to its shareholder investments. See our latest analysis for Kawan Food Berhad ROE can be calculated by using the formula: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Kawan Food Berhad is: 7.0% = RM27m ÷ RM392m (Based on the trailing twelve months to September 2024). The 'return' is the amount earned after tax over the last twelve months. Another way to think of that is that for every MYR1 worth of equity, the company was able to earn MYR0.07 in profit. Thus far, we have learned that ROE measures how efficiently a company is generating its profits. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features. On the face of it, Kawan Food Berhad's ROE is not much to talk about. Next, when compared to the average industry ROE of 9.0%, the company's ROE leaves us feeling even less enthusiastic. Kawan Food Berhad was still able to see a decent net income growth of 12% over the past five years. We reckon that there could be other factors at play here. Such as - high earnings retention or an efficient management in place. As a next step, we compared Kawan Food Berhad's net income growth with the industry and were disappointed to see that the company's growth is lower than the industry average growth of 19% in the same period. Earnings growth is a huge factor in stock valuation. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. Doing so will help them establish if the stock's future looks promising or ominous. Is Kawan Food Berhad fairly valued compared to other companies? These 3 valuation measures might help you decide. Kawan Food Berhad has a three-year median payout ratio of 38%, which implies that it retains the remaining 62% of its profits. This suggests that its dividend is well covered, and given the decent growth seen by the company, it looks like management is reinvesting its earnings efficiently. Additionally, Kawan Food Berhad has paid dividends over a period of at least ten years which means that the company is pretty serious about sharing its profits with shareholders. Upon studying the latest analysts' consensus data, we found that the company's future payout ratio is expected to rise to 49% over the next three years. Still, forecasts suggest that Kawan Food Berhad's future ROE will rise to 12% even though the the company's payout ratio is expected to rise. We presume that there could some other characteristics of the business that could be driving the anticipated growth in the company's ROE. In total, it does look like Kawan Food Berhad has some positive aspects to its business. That is, a decent growth in earnings backed by a high rate of reinvestment. However, we do feel that that earnings growth could have been higher if the business were to improve on the low ROE rate. Especially given how the company is reinvesting a huge chunk of its profits. That being so, the latest analyst forecasts show that the company will continue to see an expansion in its earnings. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
