Pua Kah Kin Samuel
Disclaimer & Declaration
The objective of the presentation is for
educational purposes. The full content of the
presentation is for illustration purposes only
and should not be used as investment
recommendations. AB Maximus and its
presenters are not responsible for all
investment activities conducted by the
participants and cannot be held liable for any
investment loss.
The company and presenters may have
personal interest in the particular shares
presented.
Content
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Company Background
Valuation
Risks
Conclusion
Q&A
Company Background
Listed on 4 October 1996 in SGX
Mainboard
 Global supplier of fish products
 One of the largest importers of frozen
seafood in China
 Performs upstream industrial fishing via
its strategic investment in SGX listed
China Fishery Group Limited (58% owned)

Shareholding Structure
Obtained from PARD Investor Relations
Business Segments

Fishing Segment
 Fishery & Fish Supply
 Industrial-Scale Fishing
 Sourcing
 Onboard Processing of Ocean Fishes

Frozen Fish Supply-Chain
Management(SCM)
 Trading
 Sourcing & Import of Fishes
 Fishmeal Processing
 Logistical Support to Commercial Fishing Vessels
Products
Obtained from China Fishery Group Investor Relations
Business Segments
Sales (HK$ Mil)
$4,369.00
$5,347.00
Fishing
Supply Chain
Management
Obtained from PARD Annual Report
Business Segments
Operating Profit (HK$ Mil)
$393.00
Fishing
$1,427.00
Obtained from PARD Annual Report
Supply Chain
Management
Business Segments – By
Revenue (HK$ Mil)
6,000.00
5,000.00
4,000.00
Fishing
3,000.00
Supply Chain
Management
2,000.00
1,000.00
0.00
2008
2009
2010
Obtained from PARD Annual Report
2011
Geographical
Breakdown
Sales (HK$ Mil)
1%
8%
1% 0%
7%
China & Hong Kong
Africa
18%
Europe
65%
East Asia
North America
Others
South America
Valuation

DCF Valuation

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



Free Cash Flow to Firm
Estimate Revenue of Segments
Apply Operating Margins
Calculate Free Cash Flow to Firm
Calculate Fair Price
Peer Comparison
 P/E Comparison
Trading Data
Last Done
0.149
52wk Range:
0.14 - 0.28
Volume
1,598,000
Avg Volume (3 mnths)
1,829,800
Market Cap
475.91M
Discounted FCFF
HK$ Mil
Book Value of Equity:
Book Value of Debt:
Annual Interest Payment:
Tax Rate:
10362.298
10058.191
443
5%
Risk Free Rate:
Market Risk Premium:
Beta:
Beta Std Dev:
2.64%
10.60%
1.223
0.099
Equity Risk Premium:
Long Term ERP
Interest Rate:
12.38%
11.69%
4.40%
WACC:
8.34%
Discounted FCFF
Asset Turnover
Fishing
42%
Frozen Fish Supply Chain Management
60%
Overheads Ratio
Effective Tax Rate
WACC
Long-Term Growth Rate
13.5%
5%
8.34%
2%
Long-Term WACC
7.99%
SGD/HKD
0.1606
Discounted FCFF
HK$ Mil Y/E 28 Sep
Revenue
Fishing
Frozen Fish Supply Chain
Management
Operating Margin
Fishing
Frozen Fish Supply Chain
Management
Operating Income (Segments)
Fishing
Frozen Fish Supply Chain
Management
Unallocated Costs/ Overheads
EBIT
Tax
EBIT (1-T)
Net Capital Expenditures
Fishing
Frozen Fish Supply Chain
Management
FCFF
2011
2012E
2013E
2014E
2015E
$5,346.51 $6,148.49 $6,763.34 $7,439.67 $7,588.46
$4,369.43 $4,806.37 $5,287.01 $5,815.71 $5,932.03
26.69%
28%
28%
28%
28%
9.00%
9.50%
9.50%
9.50%
9.50%
$1,426.79 $1,721.58 $1,893.73 $2,083.11 $2,124.77
$393.22 $456.61 $502.27 $552.49 $563.54
$265.74 $294.05 $323.46 $355.81 $362.92
$1,554.27 $1,884.13 $2,072.54 $2,279.79 $2,325.39
$30.50
$37.68
$41.45
$45.60 $465.08
$1,523.77 $1,846.44 $2,031.09 $2,234.20 $1,860.31
-688.57 $1,909.47 $1,463.93 $1,610.32 -$354.27
-418.5 -$728.24 -$801.06 -$881.17 -$193.86
$416.70 -$791.26 -$233.90 -$257.29 $1,312.18
Discounted FCFF
Firm Value (HK$ Mil)
Debt (HK$ Mil)
Cash (HK$ Mil)
Equity Value (HK$ Mil)
Minority Interest (%)
Minority Interest (HK$ Mil)
Shareholder's Value (HK$ Mil)
Total Number of Shares
Fair Value (HK$)
Fair Value (SGD $)
$16,028.00
$10,058.19
$218.07
$6,187.88
30.00%
$1,856.36
$4,331.51
3,193,994,892
$1.36
$0.218
Sensitive Analysis
Sensitive Analysis
0.35
0.3
0.25
0.2
Fair Price
0.15
0.1
0.05
0
1
1.05
1.1
1.15
1.2
1.25
1.3
1.35
1.4
1.45
Peer Comparison – P/E

Companies Chosen
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TSIT WING INTL
KHONG GUAN FLOUR
CONSCIENCE FOOD
FOOD EMPIRE HLDG
VIZ BRANZ LTD
QAF LTD
KENCANA AGRI
CHINA MINZHONG
DEL MONTE PAC LT
PEOPLE'S FOOD
MEWAH INTERNATIO
PAC ANDES RESOUR
SINARMAS LAND LT
CHINA FISHERY
GMG GLOBAL LTD
YEO HIAP SENG
SUPER GROUP LTD
PETRA FOODS LTD
INDOFOOD AGRI RE
Peer Comparison – P/E
Pac Andes EPS:
Average P/E:
Pac Andes Fair Price:
0.029005
14.42
SGD $0.418
Valuation
Fair Price by Discounted FCF
SGD $0.218
Fair Price by Peer Comparison
SGD $0.418
Current Price
SGD $0.149
Risks – Financial Risks


Solvency Risk – Moderate
Liquidity Risk – Moderate-High
 Interest Coverage: 3.1323
 Current Ratio: 1.5932
 D/A Ratio: 0.49255

Currency Fluctuation
 HK$ Peg with USD

Large Minority Interest
 Minority interest of income amounts to 20%-35%
Risk – Operational Risks



Family Business
Corporate Governance
Fishing Segment
 Weather changes
 Over reliance of customer – One customer’s total
revenue amounted to HK$ 1,511 Mil
 Over-fishing

Supply-Chain Management
 Dependence on supplier

Unsustainable Tax Rate