Zzprozaz. The new machine speed is definitely much higher than the output of the old junk 10 years ago. " new machinery line in 2021 was made primarily to benefit from new technology's ability to save energy while also increasing output."
zprozaz. I don't know what are the main reasons behind surged in Turnover over the past 2 quarters. Is there any new product launching or venturing into new market besides one off restocking as what you said. I agreed that turnover of OFI & HupSeng have returned to pre-covid level after comparing with the past 5 years. On the other side, Apollo's turnover is rather different as shown below.
Zzprozaz. We both using the different basis to make a projection of potential turnover in the next 2 quarters. I am using the quarterly turnover and inventory to see the trend and the relationship or if there is any strong correlation over the past 7 years. It seems there is something change apparently since 2022. Quarterly turnover was relatively stable trending downward over the last few years.
Distributors and big retailers were suddenly built up 40% more of end consumer products in 2 consecutive quarters. It is rather unusual practice. Why were they being so rush...afraid of increasing selling prices? That's what we normally see in commodity products. If the turnover was suddenly surged with merely 1 quarter then it could be a stock repleshment
Global hike energy costs would make Malaysia consumer products more competitive in the market since domestic industries are subsidized directly or indirectly. I don't have any export sales of Apollo but OFI's export sales surged continuously for the last 3 quarters.
People know the electricity tariff hike already. How's the impact is dependent on the industry. Heavy industry is expected to be suffered more. See how much the impact to OFI and HupSeng in its quarterly report next month.
Increase in electricity tariff will certainly have a negative impact to the bottom line of the Malaysia confectionery industry. Energy hike is a global issues and Malaysia has been heavily subsidied the local industry. Go to compare the electricity tariff in Asia
Energy costs doesn't restricted to electricity. You see the prices of petrol, diesel, lpg and natural gas...you can make a comparison between Malaysia and the Asia countries. See how much differences. In fact, confectionery factory use more natural gas if it's available in the industrial park.
This company generates cash, and shares that with its shareholders consistently every year. I think we've seen the worst dividends (20 sen) in 2019-2020. It now pays 25 sen. The dividend yield = 25 sen / 4.27 ~ 5.9% which is solid. This stock is better bought on the dip. Its dividend payout ratio is very sustainable, as it earns around 40 sen. It also has over RM1 equivalent in Net Cash, so, it can keep paying out high dividends from both its cash chest and its yearly profits. This stock pays better than EPF. I would buy the dips, and not chase as the dividend yield is higher when its price is low.
Past 4 weeks, market panic accumulation. When I bought when price was low, the dividend yield was around 6%. Now it's 4.6% as price increases. I'm now thinking of slowly selling into strength, as the realized gains will be coming to 5 years dividend collection.
Earnings appear cyclical. Its EPSs were higher in the years 2009 to 2016 compared to the years 2017 to 2022. Its PERs similarly was cyclical, were lower in the years 2009 to 2016 (PE ranged 10.6 to 15.7) compared to the years 2017 to 2022 (PE ranged from 21.9 to 29.0).
The company has been profitable during this period. Its earnings over these years were essentially flat. It has been generous in paying 94.5% of its earnings as dividends. Its dividend yield at its various prices ranged from a low of 5.93% to 9.02%.
How to benefit from investing in this stock long term? Not much growth over the long term. Essentially for income (its dividends).
As usual do not buy when its price is "high". When is its price high and when is it low? 2 methods can be used: 1. Buy when its EPS is at the lowest and its PE is near the highest. This usually corresponds to low price. 2. Buy when its DY is at the upper end of its DY. This also reflects that it is priced low.
I was thinking of taking profit as well but it's tempered with the following considerations: a) the impending generous dividend & b) the massive inflation that has eroded our MYR (despite what BNM or Govt says) which makes the Apollo shares cheap in real terms
Let me know your thoughts about the above.
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