Hanwell Holdings Ltd. – Value Analysis (SINGAPORE:DM0) : December 29, 2017

Capitalcube gives Hanwell Holdings Ltd. a score of 56.

Our analysis is based on comparing Hanwell Holdings Ltd. with the following peers – Thai Vegetable Oil Public Co. Ltd., Asahimatsu Foods Co., Ltd., Yeo Hiap Seng Ltd and Polaris Ltd. (TVO-TH, 2911-JP, Y03-SG and 5BI-SG).

Investment Outlook

Hanwell Holdings Ltd. has a fundamental score of 56 and has a relative valuation of UNDERVALUED.

Fundamental Score

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Company Overview

  • Considering peers, relative outperformance over the last year and the last month suggest a leading position.
  • It trades at a lower Price/Book multiple (0.55) than its peer median (1.13).
  • The market expects DM0-SG‘s earnings to grow at about the same rate as its chosen peers and also does not seem to expect much improvement in its below peer median returns.
  • DM0-SG‘s relative asset efficiency and net profit margins are both around the median level.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • Over the last five years, DM0-SG‘s return on assets has declined from about median to less than the median among its peers suggesting that the company’s historical competitiveness in operations is slipping away.
  • The company’s margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.
  • While DM0-SG‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company is likely overinvesting in a business with only median returns.
  • DM0-SG might have enough interest coverage to take-on additional debt prudently.

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Leverage & Liquidity

DM0-SG might have enough interest coverage to take-on additional debt.

  • While DM0-SG‘s debt to enterprise ratio of 35.45% is on the high side compared to an overall benchmark of 25% (Note: The peer median is currently 5.35%), it also enjoys a relatively high interest coverage level of 27.59x which may give the company enough financial strength to support additional debt. Thus, the company is classified as having Some Capacity to raise more debt.
  • Of the 4 chosen peers for the company, only 3 of the stocks have an outstanding debt balance. Companies with no debt include Y03-SG.

DM0-SG has maintained its Some Capacity profile from the recent year-end.

  • DM0-SG‘s interest coverage is its highest relative to the last five years and compares to a low of -5.63x in 2012.
  • While its interest coverage increased to 27.59x from 24.97x (in 2016), its peer median decreased during this period to 27.59x from 33.04x.
  • Interest coverage rose 8.07 points relative to peers.
  • DM0-SG‘s debt-EV has declined 48.33 percentage points from last year’s high and is now below its five-year average debt-EV of 48.43.
  • The decrease in its debt-EV to 35.45% from 83.78% (in 2016) was also accompanied by a decrease in its peer median during this period to 5.35% from 8.34%.
  • Relative to peers, debt-EV fell 45.34 percentage points. Unlike the peer median, it is also above the 25% leverage benchmark.

Access the detailed analysis for Hanwell Holdings Ltd.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Thai Vegetable Oil Public Co. Ltd. 4.14 2.54 349.61 122.72
Asahimatsu Foods Co., Ltd. 38.91 2.62 25.16 67.9
Yeo Hiap Seng Ltd 0 5.95 No interest exp 999
Polaris Ltd. 5.35 2.18 -0.27 18.88
Hanwell Holdings Limited 35.45 2.28 27.59 71.77
Peer Median 5.35 2.54 27.59 71.77
Best In Class 4.14 5.95 No interest exp 999

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Company Profile

Hanwell Holdings Ltd. engages in manufacturing, distributing and marketing of consumer products. It operates through the following segments: Consumer Essentials Consumer Business and Strategic Investments Packaging. The Consumer Essentials Consumer Business segment engages in the supply of provisions and household consumer products, retail franchising, manufacture and sale of soya bean products and noodles. The Strategic Investments Packaging segment engages in manufacturing and selling of corrugated paper products other packaging products. The company was founded on May 17, 1974 and is headquartered in Singapore.

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