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China Yuchai International Limited Message Board

  • dhhtuis23 dhhtuis23 Apr 14, 2010 1:46 PM Flag

    Analysis of DBS Report

    Here are the implied CYD numbers from Patrick Xu's (DBS Vickers) report:

    Revenue $7,921.3m
    EBIT $ 654.7m
    Net Inc $ 109.5m
    EPS $ 2.94

    Revenue $8,729.7m
    EBIT $ 718.7m
    Net Inc $ 120.6m
    EPS $ 3.24

    Using his 16x muliple for CYD's valuation:
    2010 $47.02 per share
    2011 $51.79

    But he forgot to add in the net cash/securities which we estimate is $8.88 per share:

    Implied Sum-of-the-Parts(SOTP):
    2010 $55.90
    2011 $60.67

    Note that Xu's implied 2010 EPS of $2.94 is much higher than the recent Barron's estimate of $2.58.

    Also note that given CYD's huge growth prospects it will likely pick up a much higher multiple than 16x, as Xu estimates.

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    • Why the low p/e? Call it the "risk factor" priced in. One does not easily forget that a couple of years ago, it was a subsidiary, supposedly cooking some books. Which meant that no earnings were reported for a year or two. And the NYSE turned a blind eye.

      Are they to be trusted? Will they pull another number on us, the Western investor. That, it seems to me, is why the P/E is low and may stay that way. And remember, the Board's decisions are hardly transparent, and may be subservient to the decisions of a controlling group. We're groping in the dark a bit here.

      Just my opinion, of course.

    • very interesting extrapolation, jaarc. one wonders how cyd has remained in the doldrums for the last couple of months. based on everything you and the company have said, much higher stock price is written in the stars. thanks for the great due diligence.

    • 10.056 Billion be clear.

    • The Revenue and EBIT numbers appear to be "Gross"...which makes sense as HLA consolidates those amounts at 100%.

      The Net Income figure appears to have been adjusted for HLA's ownership percentage of 27.5%.

      As such, your E.P.S. numbers do make sense.

      Also, if this analyst thinks that Yuchai will only show revenues of S$ 2,994.6 million...which is equal to about $2.1 billion...I think that he will be way too low.

      I'm looking for something between $2.5 and $3.0 billion in US Dollars for 2010.

      Just my opinion.

    • I ate Chinese for lunch today to celebrate. However, if CYD hits $50 a share, I will buy the whole board lunch.

      Speaking of P/Es - terrible comparison point with respect to industry, but I happened to pull up CAGC today and couldn't help but laugh at the P/E of 48. If CYD could just trade at a REASONABLE P/E, I'd be ecstatic.

    • E.P.S. figures seem reasonable.

      I'm going to have to look at those revenue figures though...they don;t sound right.

      • 1 Reply to jaarc.rm
      • Ok. Mr. Xu's report seems to have a discrepency. On page 4, CYD is said to have a 6.4x P/E (I assume using his 2010 estimate). That works out to $105.78m or $2.838 EPS. However, on p. 7 of his report the line for "Net Profit S$m)" shows S$41.4m for 2010. That works out to $30.159m (US$), or only $0.8093 per share. So I assumed that this net profit number (along with the sales and EBIT) was the 27.5% share HLA owns, so I grossed it up by dividing it by 27.5%. That led to the $2.94 EPS ( close to page 4 $2.838 number - although the analyst's numbers should be equivalent). It appears thought that the sales number on page 7 is for 100% of CYD and not the 27.5% share as the Net Profit number seems to be.

        Bottom line on page 4 his EPS estimate is at least $2.84 per share. At 16x that means $45.44 per share. Adding in $8.88 in net cash yields a SOTP of $54.32 per share

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