KFIMA - unrecognized transition

[i4value]

KFIMA made it big in its early days due to its security printing business. I suspect that it was a business that resulted from it "political" connections. Anyway over the years, there were changes to the political scene. To make the long story short, KFIMA eventually lost this "windfall" business.

The good thing was that over the years, when it had the windfall business, it also diversified into other sectors. So it got deeper into bulking, fisheries and plantations.

I think today, the non-security printing businesses have become much bigger contributors to the bottom line. So while there is not going to be much growth in the security printing business, the other segments are growing. But I don't think the market has recognized this change.

It is an interesting question of why the market is behaving in such a manner.  I covered KFIMA as one of the case studies in my ebook and if you do a DCF valuation, you will see that there is a margin of safety.

FYI I have converted part of my ebook into infographics format that is freely available from https://www.i4value.asia/2022/08/do-you-....html#more

[i4value]

A decade ago, KFIMA manufacturing segment was the key driver for the group due to its supply of travel documents. Unfortunately it lost this lucrative supply contract and the group business suffered so that it did not achieved any revenue growth over the past 12 years.

But the Group had managed to offset this by growing the business in the 3 other segments – Plantation, Food, and Bulking. The returns with the current business profile have yet to reach the levels of that before the loss of the supply contract. But the Group is making progress.

The Group is fundamentally sound. It has managed to deliver returns greater than the cost of capital. At the same time, there is a sufficient margin of safety based on both the Asset Value and Earnings Power Value.