Hello, its me again.
DRBHICOM announced its quarter report ended 31st December 2019, and reported a net profit of RM272 million?! Its EPS reported is at a whopping 14.10 sen compared to last year quarter of 3.78 sen. A 273% in net income? It is truly a fantastic quarter for our Proton owner DRBHICOM!
Well, If you are a long-time observer of DRBHICOM, you will smell something fishy here.. Its not the first time DRBHICOM report such a high earnings before, as you can see from its past record in 2017..
So you can pretty much already know what happens here.. it MUST BE ONE-OFF GAIN!
If you read the latest report, you will see that the other income increased from RM65million in FY2018 to RM630million in FY2019. Revenue increased to RM3.5 billion from RM3.17 billion. So where does this income came from?
To understand better, we need to look at where does this money came from.. we can check this from its Cash Flow Statement. Normally, to make your life easier, just check the which section (Operating, Investing, Financing) has an unusually high net cash inflow, So:
We can see that its net cash inflow from investing activities increases by RM574 million. Normally if a company do not invest their cash (out flow) but instead has a high net cash inflow, it basically means they either dispose their subsidiaries or interest in their associates or subsidiaries. The company must have good cash flow to invest their cash in their associates. In DRBH's case, they simply need more cash therefore you can see it in their cash flow statement:
They simply dispose almost anything that they can to generate cash as you can see from the Figure above. To support my argument more, from the segment reporting below, you can see its earning increased to RM581 million through its Investment Holding segment.
Hence, not considering the profit, DRBHICOM will be making a loss of almost -RM310 million (Estimation). Its Services Factor (POS Malaysia, Bank Mualamat) simply makes too much loss that even its automotive sector cannot cover. A silver lining is that the Automotive Sector reported a record high revenue of RM7.5 billion with a segment profit of RM332 million.
As a conclusion, I still do not think DRBHICOM is a favourable investment as their Profit After Tax (PAT) is undesirable. They have a really high debt with a debt-to-equity ratio of 2.5 and above. Not only they have to pay taxations, they need to pay their Sukuk holder (Islamic Bond) a perpetual dividend of RM40 to RM60 million per quarter.
If you haven't read about my DRBHICOM post, you can read it here PART 1 Part 2.
If you like the post, please like and share!
Disclaimer: All these are simply my opinions on the company and I do not recommend any buy/sell advices. If you made a loss/profit based on these I do not take any responsibility for them.
DRBHICOM announced its quarter report ended 31st December 2019, and reported a net profit of RM272 million?! Its EPS reported is at a whopping 14.10 sen compared to last year quarter of 3.78 sen. A 273% in net income? It is truly a fantastic quarter for our Proton owner DRBHICOM!
Well, If you are a long-time observer of DRBHICOM, you will smell something fishy here.. Its not the first time DRBHICOM report such a high earnings before, as you can see from its past record in 2017..
If you read the latest report, you will see that the other income increased from RM65million in FY2018 to RM630million in FY2019. Revenue increased to RM3.5 billion from RM3.17 billion. So where does this income came from?
To understand better, we need to look at where does this money came from.. we can check this from its Cash Flow Statement. Normally, to make your life easier, just check the which section (Operating, Investing, Financing) has an unusually high net cash inflow, So:
As a conclusion, I still do not think DRBHICOM is a favourable investment as their Profit After Tax (PAT) is undesirable. They have a really high debt with a debt-to-equity ratio of 2.5 and above. Not only they have to pay taxations, they need to pay their Sukuk holder (Islamic Bond) a perpetual dividend of RM40 to RM60 million per quarter.
If you haven't read about my DRBHICOM post, you can read it here PART 1 Part 2.
I created a new Telegram group because I don't see any English Malaysian Stock Discussion Group, So click the link to join!
https://t.me/joinchat/P5TOWRvz2vDpp9MApfzGQA
https://t.me/joinchat/P5TOWRvz2vDpp9MApfzGQA
Disclaimer: All these are simply my opinions on the company and I do not recommend any buy/sell advices. If you made a loss/profit based on these I do not take any responsibility for them.
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