CCB: Bottom-line soared
Background
Cycle & Carriage Bintang Bhd (‘CCB’) is the largest dealer of Mercedes-Benz motor vehicles in Malaysia, involved in retail and after-sales service.
Diagram 2: Mercedes-Benz's Global Sales for 1H 2015 & 2014 (Source: Media.Daimler)
Recent Financial Performance
CCB's top-line and bottom-line rose gradually over the last 3 years. That steady increase suddenly went exponentially. The reason given for the improved top-line and bottom-line are:
Chart: CCB's last 12 quarters' P&L (Source: ShareInvestor.com)
Valuation
CCB received a dividend of RM11.2 million from MBM for 1H2015. In FY2014, it did not receive any dividend from MBM due to poor financial result. In FY2013 & FY2012, CCB received dividend totaling RM11.2 million respectively, in 2 equal tranches. Does this mean that CCB may receive another dividend of RM11.2 million from MBM this year? If so, CCB's FY2015 EPS could be as high as 57 sen. CCB (closed at RM3.46 yesterday) is now trading at a PE of 6 times. In addition, CCB may pay out dividend again after suspending in FY2013 & FY2014. It paid out dividends totaling 10 sen in FY2012 & FY2011. If it does the same in FY2015, the DY for the stock is 2.9%.
Diagram 3: CCB's 1H2015, 1H2014 & 1H2013 P&L (Source: Company via Bursa website)
Diagram 4: CCB's FY2014, FY2013 & FY2011 P&L (Source: Company via Bursa website)
Technical Outlook
CCB has broken above its downtrend line at RM2.20 in May. The share price could potentially test the "horizontal" line ('AB') at RM6.00.
Chart 2: CCB's weekly chart as at July 23, 2015 9Source: ShareInvestor.com)
Chart 3: CCB's monthly chart as at July 23, 2015 9Source: ShareInvestor.com)
Conclusion
Based on good financial performance, fairly attractive valuation & positive technical outlook, CCB could be a good stock for long-term investment.
Note:
Cycle & Carriage Bintang Bhd (‘CCB’) is the largest dealer of Mercedes-Benz motor vehicles in Malaysia, involved in retail and after-sales service.
Its After Sales centres will provide vehicles complete care, from routine maintenance work to complete restoration of your vehicles plus retailing Mercedes-Benz Merchandise items.
Mercedes-Benz Sales Rising
Based on latest Motor Vehicles sale data (up to the month of May), we can see that the Mercedes-Benz sale volume has risen substantially. It is currently sitting in 7th position- rose from 15th position in July 2014. It managed to chalk up a sales volume of 3970 in 5 months of this year as compared to 3876 for the first 7 months of last year.
Diagram 1: Malaysia's MV Sales for May 2015 & July 2014 (Source: MMA, via MotorTrader)
Worldwide, Mercedes-Benz sales volume rose 15.7% to 960589 for first 6 months of the year. In Asia-Pacific ex-Japan & China, the sale volume grew by 25.5% to 86629.
Recent Financial Performance
CCB's top-line and bottom-line rose gradually over the last 3 years. That steady increase suddenly went exponentially. The reason given for the improved top-line and bottom-line are:
- Unit sales up 46%
- Higher earnings from Mercedes-Benz operations
- Dividend received from Mercedes-Benz Malaysia (“MBM”)
Chart: CCB's last 12 quarters' P&L (Source: ShareInvestor.com)
Valuation
CCB received a dividend of RM11.2 million from MBM for 1H2015. In FY2014, it did not receive any dividend from MBM due to poor financial result. In FY2013 & FY2012, CCB received dividend totaling RM11.2 million respectively, in 2 equal tranches. Does this mean that CCB may receive another dividend of RM11.2 million from MBM this year? If so, CCB's FY2015 EPS could be as high as 57 sen. CCB (closed at RM3.46 yesterday) is now trading at a PE of 6 times. In addition, CCB may pay out dividend again after suspending in FY2013 & FY2014. It paid out dividends totaling 10 sen in FY2012 & FY2011. If it does the same in FY2015, the DY for the stock is 2.9%.
Diagram 3: CCB's 1H2015, 1H2014 & 1H2013 P&L (Source: Company via Bursa website)
Diagram 4: CCB's FY2014, FY2013 & FY2011 P&L (Source: Company via Bursa website)
Technical Outlook
CCB has broken above its downtrend line at RM2.20 in May. The share price could potentially test the "horizontal" line ('AB') at RM6.00.
Chart 2: CCB's weekly chart as at July 23, 2015 9Source: ShareInvestor.com)
Chart 3: CCB's monthly chart as at July 23, 2015 9Source: ShareInvestor.com)
Conclusion
Based on good financial performance, fairly attractive valuation & positive technical outlook, CCB could be a good stock for long-term investment.
Note:
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