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Cheetah Holdings Bhd
ESTABLISHED since 1977, Cheetah Holdings Bhd is a local fashion apparel company, with Cheetah, a home grown sports apparel label, as its core brand. The company also holds two international licensee brands — Ladybird and GQ.

Cheetah seems to be unexciting compared with the more well-known local fashion players Padini Holdings Bhd and Bonia Corp Bhd. However, it operates in a different segment – sports apparel, and its valuations are at a steep discount to its peers and even its own underlying asset values. This suggests no value is being accorded to its brands.

At the current stock price of 54.5 sen, Cheetah has a small market capitalisation of RM66 million. The stock trades at a huge discount of 49% to its book value of RM1.05 as at end-June 2014, with a trailing 12-month P/E ratio of 9.4 times. Padini, on the other hand, is trading at 3.1 times book and a trailing 12-month P/E of 13.2 times. Bonia trades at 2.6 times book and a trailing 12-month P/E of 16.0 times.

There is little doubt that Cheetah is far less aggressive than Padini or Bonia, and its financial trends have been declining. Nonetheless, the company is still profitable, cash rich and may represent a value play. It had net cash of RM18.9 million as at June 2014, or 15.5 sen per share, although this has declined from RM32.4 million a year earlier.

Sales were stagnant for the last five years, ranging between RM123.8 million and RM 130.4 million. Pre-tax profit has also been on a declining trend, from RM18.4 million in FY 30 June 2010, to RM14.7 million in FY2012 and RM7.1 million in FY2014. For FY2014, the company attributed the decline in profits to higher operating costs due to the imposition of minimum wages.

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This article first appeared in The Edge Financial Daily, on November 12, 2014.

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