Kenanga give Caring Pharmacy fair
value at RM1.55 based on 13x CY14 EPS of 11.9 sen. They expect Caring to
register net profit of RM23.8m and RM27.4m in FY14 and FY15,
respectively. They conservatively forecast a 17% revenue growth each in
FY14 and FY15, which is conservatively lower than the past three years
average of 20% on the back of same-store-sales growth and opening of new
outlets. They have factored in marginally lower margins taking into
account higher advertising and promotion activities in an effort to
increase or sustain its market share in our forecasts. Based on their
earnings estimate and a 30% dividend payout assumption, they expect FY14
and FY15 net Dividend Per Share of 3.3 sen and 3.8 sen respectively,
translating to an average Caring Pharmacy dividend yield of 3%.
Their fair value is RM1.55 is based on 13x CY14 EPS of 11.9 sen. The Caring Pharmacy PE ratio of 13x multiple is at 22% and 30% discount to Berjaya Food’s 1-year forward PER of 17.0x and Berjaya Retail’s 18.5x PER valuation, respectively, when it was taken private.
