Small/Mid Cap Strategy and Stock Picks - the DBS Vickers ...

Regional Small/Mid Cap Strategy Q2 2008
ARA Asset Management
Income Statement (S$ m) Balance Sheet (S$ m)
FY Dec 2006A 2007A 2008F 2009F FY Dec 2006A 2007A 2008F 2009F
Revenue 30 60 75 100 Net Fixed Assets 1 1 0 0
Other Opng (Exp)/Inc (14) (22) (32) (43) Invts in Associates & JVs 0 0 0 0
Operating Profit 15 39 43 57 Other LT Assets 0 30 66 66
Other Non Opg (Exp)/Inc 1 0 0 0 Cash & ST Invts 16 85 83 101
Associates & JV Inc 0 0 1 1 Other Current Assets 8 25 5 7
Net Interest (Exp)/Inc 0 0 0 0 Total Assets 24 142 156 175
Exceptional Gain/(Loss) 0 0 0 0
Pre-tax Profit 16 39 45 59 ST Debt 0 0 0 0
Tax (3) (5) (7) (9) Other Current Liab 9 21 23 25
Minority Interest 0 0 (1) (3) LT Debt 0 20 20 20
Preference Dividend 0 0 0 0 Other LT Liabilities 0 0 0 0
Net Profit 13 34 37 47 Shareholder’s Equity 16 101 112 126
Net Profit before Except. 13 34 37 47 Minority Interests 0 0 1 4
EBITDA 16 39 45 59 Total Cap. & Liab. 24 142 156 175
Sales Gth (%) 7.7 104.4 24.9 33.2 Non-Cash Wkg. Capital (1) 4 (17) (18)
EBITDA Gth (%) 4.2 141.3 15.1 30.6 Net Cash/(Debt) 16 66 64 81
Opg Profit Gth (%) (2.7) 153.8 12.4 32.0
Net Profit Gth (%) 0.1 152.6 9.0 27.2
Effective Tax Rate (%) 17.6 12.5 15.0 15.0
Cash Flow Statement (S$ m)
Rates & Ratio
FY Dec 2006A 2007A 2008F 2009F FY Dec 2006A 2007A 2008F 2009F
Pre-Tax Profit 16 39 45 59 Opg Profit Margin (%) 51.7 64.2 57.7 57.2
Dep. & Amort. 0 0 0 0 Net Profit Margin (%) 45.6 56.4 49.2 47.0
Tax Paid (2) (3) (5) (7) ROAE (%) 114.1 58.3 34.8 39.5
Assoc. & JV Inc/(loss) 0 0 (1) (1) ROA (%) 67.0 41.0 24.9 28.5
Chg in Wkg.Cap. 1 6 19 (2) ROCE (%) 106.9 58.2 34.5 40.2
Other Operating CF 2 (32) 0 0 Div Payout Ratio (%) 42.3 65.5 70.0 70.0
Net Operating CF 17 10 58 49 Net Interest Cover (x) NM NM NM NM
Capital Exp.(net) 0 0 0 0 Asset Turnover (x) 1.5 0.7 0.5 0.6
Other Invts.(net) 0 (22) (36) 0 Debtors Turn (avg days) 18.7 81.3 73.1 23.0
Invts in Assoc. & JV 0 0 0 0 Creditors Turn (avg days) 2.3 1.9 1.3 1.0
Div from Assoc & JV 0 0 1 1 Inventory Turn (avg days) N/A N/A N/A N/A
Other Investing CF 0 0 0 0 Current Ratio (x) 2.7 5.3 3.9 4.3
Net Investing CF 0 (22) (34) 1 Quick Ratio (x) 2.7 5.3 3.9 4.3
Div Paid (6) (23) (26) (33) Net Debt/Equity (X) CASH CASH CASH CASH
Chg in Gross Debt (1) 20 0 0 Capex to Debt (%) 92.5 1.6 0.0 0.0
Capital Issues 0 76 0 0 N. Cash/(Debt)PS (S cts) 2.7 11.3 11.0 13.9
Other Financing CF 0 (1) 0 0 Opg CFPS (S cts) 2.8 0.7 6.7 8.7
Net Financing CF (7) 71 (26) (33) Free CFPS (S cts) 2.9 1.6 10.0 8.4
Net Cashflow 10 59 (2) 17
Segmental Breakdown
PE (X)
FY Dec 2006A 2007A 2008F 2009F
(x)
Revenues (S$ m)
Reit Base and 24 44 41 45
25.0
Acquisition Fees 1 15 29 43 23.0
Portfolio Management 0 0 5 12 21.0
Total 26 60 75 100
Operating Profit (S$ m)
Reit Base and 18 24 23 25
Acquisition Fees 1 8 16 24
Portfolio Management (3) 6 3 7
Total 16 39 43 57
19.0
17.0
15.0
13.0
11.0
9.0
7.0
5.0
Nov-07 Dec-07 Jan-08 Feb-08 Mar-08
Source: Company, DBS Vickers
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