Colex: PEG and Intrinsic Value and Notes on Annual Report

Noticed that Colex Share price has dropped slightly recently.

Like to do a quick re-look on the trailing PEG and Intrinsic Value of Colex using information found in POEMS 2.0. Did the study previously (read here).

1) Trailing PEG

• Colex Trailing PEG: 7.94/(25.09+1.96) = 0.29
• P/E ratio is 7.94, 5 years EPS growth rate: 25.09, Dividend yield: 1.96

That is way below 1. A ratio below 1 suggests a good investment. (read here)

 

2) Intrinsic Value

First let’s look at the estimated 5 years earning growth. We are going to use a time-frame of 5 years from now for this purpose (don’t have the 10 years figures). Given EPS and a PE ratio, stock price can easily be calculated for any company. Using the below formula. (actually I just got the results after keying in the figures in this website) F = P(1+R)^N where:

• F = the future EPS
• P = the starting (present) EPS (0.03)
• R = compound growth rate (25.09)
• N = number of years in the future (5)

Estimated future EPS: 0.0919

I will be estimating the future PE of Colex to be 8.

 

Future Stock Price

P=EPSxPE

• P = future stock price
• EPS = future EPS
• PE = future PE

Hence future stock price of Colex is 0.0919 x 8 = 0.7352

 

Intrinsic Value

P=F/(1+R)N

• P = present (intrinsic) value
• F = future stock price (0.7352)
• R = MARR (15% or 0.15)
• N = Number of years (5)

Hence intrinsic value of Colex is 0.37.

Current stock price of Colex is 0.25. Hence percentage difference between the intrinsic value and current stock price is 48%!

 

3) Annual Report 2014

I briefly glance through the 2014 Annual Report. Certain items / figures kind of “jump” at me. So just taking notes. Will mull over it later.

a) Item 3 (Pg 54): Revenue increased from $52,631,049 (2013) to $58,707,152 (2014). More than $4 million.

b) Item 9 (Pg 58): Cash at banks decrease from $7,426,892 (2013) to $5,644,001 (2014). Fixed Deposits increased from $0 (2013) to $1,000,125 (2014).

c) Item 13 (Pg 60): Deferred Income Tax Liabilities (To be settled within one year), decreased from $247,244 (2013) to $190,871 (2014). Balance at the end decreased from $880,323 (2013) to $817,643 (2014).

d) Item 14 (Pg 62): Trade and other Payables increased from $4,725,061 (2013) to $5,928,973 (2014) – more than 1 million!

e) Item 15 (Pg 62): Other income increased from $928,762 (2013) to $1,264,913 (2014) – mainly due to Special Employment Credit Scheme – close to $491,426 (don’t think this is recurring for the future years).

f) Item 16 (Pg 63): Staff cost increased a lot, from $21,088,317 (2013) to $24,575,530 (2014) – more than $3 million!

g) Item 19 (Pg 65): Profit before taxation increased from $3,134,472 (2013) to $4,813,693 (2014). Increase of $1,679,221.

 

 

In gist, looking at the trailing PEG ratio and Intrinsic value (which is lower than the current stock price), it would appear that my reasons for buying the share is still intact (fundamentally base on financial figures).

As for the Annual Report, I would like to find out more on why Trade and other Payables increased, Staff cost increment & Special Employment Credit Scheme.