CONSUMER
BISON CONSOLIDATED
(BISON MK EQUITY, BISO.KL)
22 Dec 2016
Earnings Come Charging In
BUY
Company report
(Maintained)
AmInvestment Bank Bhd
www.amsecurities.com
Rationale for report: Company result
03-2036 2372
Price
Fair Value
52-week High/Low
RM1.70
RM2.24
RM2.00/RM1.08
Investment Highlights

Key Changes
Fair value
EPS


YE to Oct
FY16
FY17F
FY18F
FY19F
Revenue (RM mil)
Core net profit (RM mil)
FD Core EPS (sen)
FD Core EPS growth (%)
Consensus Net Profit (RM mil)
DPS (sen)
PE (x)
EV/EBITDA (x)
Div yield (%)
ROE (%)
Net Gearing (%)
263.6
18.1
5.8
33.9
1.5
29.1
18.9
0.9
16.4
nm
345.6
21.8
7.0
20.7
24.1
1.7
24.1
14.3
1.0
13.5
nm
373.2
29.4
9.5
34.7
30.8
1.7
17.9
10.7
1.0
15.9
nm
419.3
35.0
11.3
19.1
1.7
15.0
8.7
1.0
16.3
nm



Stock and Financial Data
Shares Outstanding (million)
Market Cap (RMmil)
Book Value (RM/share)
P/BV (x)
ROE (%)
Net Gearing (%)
310.1
527.1
0.49
3.5
16.4
-

Major Shareholders
D&D Consolidated (68.8%)
Dang Tai Kien (3.7%)
Dang Tai Gean (1.5%)
100.0
0.2

Free Float
Avg Daily Value (RMmil)
Price performance
3mth
6mth
12mth
Absolute (%)
Relative (%)
(5.6)
(3.9)
17.2
17.8
-


We maintain our BUY rating on Bison Consolidated
(Bison) with a higher fair value of RM2.24/share (vs.
2.13/share previously) as we rollover our valuations to
CY17F from FY17F. Our valuations are pegged to an
unchanged PE of 27x FY17F earnings which is in line with
7-Eleven Malaysia.
Overall, earnings were largely in line with both ours and
consensus estimates at 104% and 100% respectively.
Bison’s 4QFY16 net profit of RM4.3mil (QoQ: 6.2%)
brought cumulative earnings to RM18.1mil (YoY: 34.2%).
Meanwhile, 4QFY16 revenue of RM72.4 (QoQ: 11.3%) grew
FY16 revenue to RM236.6 (YoY: 21.1%). No dividend was
declared.
Bison’s QoQ revenue growth of 6.2% was driven by the
9.4% higher store count or the addition 26 new stores
against the preceding quarter. It brought the total store
count to 303 stores as at end of Oct. It represents a net
addition of 74 new stores, slightly ahead of our estimate of
70 stores for the financial year.
Gross margins for the year improved to 35.7% from 34.2%
on the back of better product mix such as its fresh food
gaining greater traction. Notably, Bison’s EBITDA margin
for FY16 have improved as well to 10.4% (vs. 9.7%
previously in FY15) despite its 32% enlarged store base.
We also paid visit to Bison’s newly launched Gourmet To
Go store in MidValley yesterday. It is a refurbishment of its
existing 1,500 sq ft store. The flagship store highlights its
extensive localised fresh food selection. Fresh food SKU
is estimated to range between 200 and 300, which has a
production split of 70:30 ratio between external sourcing
and in-house production. Chilled meals with a shelf life of
1 day were reasonably priced within RM10.
Given that earnings were largely within our estimates, we
leave our FY17-FY18F earnings unchanged while
introducingFY19F projections. Key risks to Bison include:1) delay in food-processing centre setup, which is
forecasted to further improve product mix, 2) dilution in its
advertising and promotional income per store basis and 3)
foreign labour supply.
We continue to like Bison for :- 1) full autonomy to its
brand name of myNews.com; 2) aggressive store
expansion plan and 3) potential margin enhancement
underpinned by sales of products from the group’s food
processing
centre
in
Rawang
and
franchising
opportunities.
Bison Consolidated
22 Dec 2016
EXHIBIT 1: RESULTS REVIEW
YE Apr
Revenue
16Q3
65.1
16Q4
72.4
Cost of sales
-42.8
-46.7
Gross profit
22.3
25.8
Other income
0.9
Admin exp
Other exp
QoQ (%)
11.3
FY15
217.5
FY16
263.6
-143.1
-169.6
74.4
94.0
1.1
0.5
2.6
-17.0
-19.2
-53.5
-68.1
-1.4
-1.8
-3.9
-5.4
15.6
YoY (%)
21.2
26.3
EBITDA
6.0
7.1
17.4
21.1
27.5
Depreciation
-1.2
-1.3
10.9
-3.6
-4.5
24.4
EBIT
4.9
5.8
19.0
17.5
23.0
31.5
Finance costs
-0.1
-0.1
-0.6
-0.5
Share of profit of associate
0.3
0.1
PBT
5.0
5.8
Tax expense
-1.0
-1.5
PATAMI
4.1
4.3
15.2
6.2
0.7
1.1
17.7
23.6
-4.2
-5.5
13.5
18.1
30.3
33.4
34.3
Core EPS - Diluted (sen)
1.3
-5.1
4.4
0.1
Gross DPS (sen)
0.0
0.0
0.0
0.0
BV / share (RM)
0.5
0.5
0.3
0.5
EBIT margin (%)
9.3
9.8
0.5
8.0
10.4
2.4
Pretax margin (%)
7.7
8.0
0.3
8.1
9.0
0.8
-19.3
-25.6
-6.3
-23.9
-23.2
0.7
Effective tax rate (%)
Source: Company, AmInvestment Bank Bhd
EXHIBIT 3: BISON’S SELECTION OF CHILLED FOOD
EXHIBIT 2: BISON’S 1,500 SQ FT GOURMET TO GO STORE
Source: AmInvestment Bank Bhd
Source: AmInvestment Bank Bhd
AmInvestment Bank Bhd
2
Bison Consolidated
22 Dec 2016
EXHIBIT 4: FINANCIAL DATA
Income Statement (RMmil, YE 31 Oct)
FY15
FY16
FY17F
FY18F
FY19F
Revenue
EBITDA
Depreciation/Amortisation
Operating income (EBIT)
Other income & associates
Net interest
Exceptional items
Pretax profit
Taxation
Minorities/pref dividends
Net profit
Core net profit
217.5
20.7
(3.6)
17.1
1.2
(0.6)
17.7
(4.2)
13.5
13.5
263.6
27.5
(4.5)
23.1
3.7
(0.5)
22.5
(5.5)
17.1
18.1
345.6
36.3
(6.3)
30.0
2.6
(0.4)
29.6
(7.7)
21.8
21.8
373.2
47.2
(7.3)
40.0
2.6
(0.4)
39.5
(10.1)
29.4
29.4
419.3
55.5
(8.2)
47.3
2.6
(0.4)
46.9
(11.9)
35.0
35.0
Balance Sheet (RMmil, YE 31 Oct)
FY15
FY16
FY17F
FY18F
FY19F
46.7
1.6
48.3
6.1
21.8
4.2
19.2
51.2
21.4
1.3
10.4
33.1
8.3
2.6
10.9
55.5
0.18
65.3
11.3
76.6
15.7
29.8
7.0
75.4
127.8
26.1
1.3
14.7
42.1
7.0
3.0
9.9
152.4
0.49
83.9
11.3
95.3
17.5
36.9
6.6
75.4
136.5
33.9
1.3
15.1
50.2
7.0
3.0
9.9
171.6
0.55
96.7
11.3
108.0
30.9
38.6
7.2
75.4
152.1
35.4
1.3
15.1
51.8
7.0
3.0
9.9
198.3
0.64
108.5
11.3
119.8
50.1
43.0
8.0
75.4
176.6
39.4
1.3
15.1
55.8
7.0
3.0
9.9
230.7
0.74
Cash Flow (RMmil, YE 31 Oct)
FY15
FY16
FY17F
FY18F
FY19F
Pretax profit
Depreciation/Amortisation
Net change in working capital
Others
Cash flow from operations
Capital expenditure
Net investments & sale of fixed assets
Others
Cash flow from investing
Debt raised/(repaid)
Equity raised/(repaid)
Dividends paid
Others
Cash flow from financing
Net cash flow
Net cash/(debt) b/f
Net cash/(debt) c/f
17.7
3.6
(2.5)
(10.3)
8.5
(7.5)
(0.5)
(8.1)
(0.8)
(0.5)
(0.8)
(2.1)
(1.7)
7.8
6.1
22.5
4.5
(2.7)
(7.0)
17.3
(23.7)
(61.7)
(85.4)
(1.3)
(4.7)
81.5
75.6
7.5
6.4
13.9
29.6
6.3
1.0
(7.7)
29.1
(25.0)
(25.0)
(5.3)
(5.3)
(1.1)
16.1
14.9
39.5
7.3
(0.7)
(10.1)
36.0
(20.0)
(20.0)
(5.3)
(5.3)
10.8
17.5
28.3
46.9
8.2
(1.2)
(11.9)
42.0
(20.0)
(20.0)
(5.3)
(5.3)
16.7
30.9
47.5
Key Ratios (YE 31 Oct)
FY15
FY16
FY17F
FY18F
FY19F
Revenue growth (%)
EBITDA growth (%)
Pretax margin (%)
Net profit margin (%)
Interest cover (x)
Effective tax rate (%)
Dividend payout (%)
Debtors turnover (days)
Stock turnover (days)
Creditors turnover (days)
19.3
10.4
8.1
6.2
29.6
23.7
3.7
4
31
30
21.2
33.3
8.6
6.5
45.6
24.3
28.2
8
36
33
31.1
31.8
8.6
6.3
72.5
26.1
24.1
7
35
32
8.0
30.1
10.6
7.9
96.6
25.6
18.0
7
37
34
12.4
17.5
11.2
8.4
114.5
25.3
15.1
7
36
33
Fixed assets
Intangible assets
Other long-term assets
Total non-current assets
Cash & equivalent
Stock
Trade debtors
Other current assets
Total current assets
Trade creditors
Short-term borrowings
Other current liabilities
Total current liabilities
Long-term borrowings
Other long-term liabilities
Total long-term liabilities
Shareholders’ funds
Minority interests
BV/share (RM)
Source: Company, AmInvestment Bank Bhd estimates
AmInvestment Bank Bhd
3
Bison Consolidated
22 Dec 2016
DISCLOSURE AND DISCLAIMER
This report is prepared for information purposes only and it is issued by AmInvestment Bank Berhad (“AmInvestment”)
without regard to your individual financial circumstances and objectives. Nothing in this report shall constitute an offer to sell,
warranty, representation, recommendation, legal, accounting or tax advice, solicitation or expression of views to influence
any one to buy or sell any real estate, securities, stocks, foreign exchange, futures or investment products. AmInvestment
recommends that you evaluate a particular investment or strategy based on your individual circumstances and objectives
and/or seek financial, legal or other advice on the appropriateness of the particular investment or strategy.
The information in this report was obtained or derived from sources that AmInvestment believes are reliable and correct at
the time of issue. While all reasonable care has been taken to ensure that the stated facts are accurate and views are fair
and reasonable, AmInvestment has not independently verified the information and does not warrant or represent that they
are accurate, adequate, complete or up-to-date and they should not be relied upon as such. All information included in this
report constituteAmInvestment’s views as of this date and are subject to change without notice. Notwithstanding that,
AmInvestment has no obligation to update its opinion or information in this report. Facts and views presented in this report
may not reflect the views of or information known to other business units of AmInvestment’s affiliates and/or related
corporations (collectively, “AmBank Group”).
This report is prepared for the clients of AmBank Group and it cannot be altered, copied, reproduced, distributed or
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If any provision of this disclosure and disclaimer is held to be invalid in whole or in part, such provision will be deemed not to
form part of this disclosure and disclaimer. The validity and enforceability of the remainder of this disclosure and disclaimer
will not be affected.
AmInvestment Bank Bhd
4