Dukang Distillers Holdings

[propertyinvestor]

This lousy stock doesnt pay dividends at all! Not once since their listing! And the reason why they hoard cash? They need it for "expansion"

[portuser]

Sgd
Has the Straits Times writer forgotten that when times are good, more higher-priced baijiu is consumed; and leans years see drinkers taking to cheaper ones having much lower gross profit margin?

[sgd]

Hi portuser

I guess when it comes to these things it will be a matter of preference. Example there are all kinds of beer in sg today, go to any coffeeshop they have all kinds today and different people will like different beer for different reasons. If you see the previous article I do not consider baijiu to be at all expensive if it is "consumed" at every food occasion.

The straits times article is just trying to show which sectors in china that are likely to perform better compared to other sectors during the current slowdown wuliangye the second largest maker of baijiu was given as an example. If you read the article I posted earlier baijiu companies in china have been doing exceptionally well recently and been giving out generous dividends, in light of this trend dukang management has also come out to say they are considering giving out dividends or thinking of doing share buy backs to boost the share prices. Of course I'm hoping the mgt will follow this trend but I guess we have to wait for further announcements to know what they are going to do.

As a stock entry I feel this is a great time to go in as the stock chart shows it has fallen from highs of 90 over cents to low of 20cents. But each his own.

[propertyinvestor]

If Dukang can pay a dividend this year, that would a be a possible catalyst for further price movement.

[portuser]

Sgd
The article 五年百亿，杜康凭什么 in 华夏酒报 makes the point that Dukang Distillers Holdings will benefit from rising incomes as consumers trade up for pride and prestige:
"举个简单的例子，过去农村喝酒也就是喝几块钱的光瓶酒，而现在通常都是喝20元/瓶—30元/瓶或是30元/瓶—40元/瓶的白酒，在郑州市区基本上已经看不到10元/瓶以下的酒了。苗国军认为，随着经济的发展，这种消费升级的趋势也会加快。再加上国家也在改革收入分配机制，尽可能地通过税收、社会保障等措施，让国民的整体收入水平往上提，这为所有行业的发展奠定了基础。
"整个消费升级对包括白酒在内的所有行业都有益处，而白酒行业会比其它行业受益更多。”苗国军认为，酒本身是一种精神产品、面子产品，随着消费水平的逐步升级，白酒行业的机会会越来越大，杜康的机会也就越来越大。"

The 23 sub-brands of Dukang baijiu are divided into two categories. In 3Q of FY12, the average selling price of the premium category was RMB190 per kg, and that of the regular category was RMB34 only.
While the premium category made up only one-eighth of sales volume, it contributed 60% of the overall gross profit of Dukang baijiu.
Dukang Distillers Holdings' optimism on robust profit growth rests partly on its projection that its top-priced "Juizu Dukang" will sell well. If the economy trends down and the wealth effect wears thin, consumers may trade down instead of up.

[portuser]

Sgd
Do you find the announcement "EXTENSION OF TIME TO COMPLY WITH RULE 712(2) OF THE LISTING MANUAL OF THE SGX" by Dukang Distillers confusing?

[sgd]

still no dividend ... hmm

Dukang Distillers achieves record earnings with FY2012 net profit growing 29.8% yoy to RMB218.1 million
- Sales up 28.1% yoy to RMB1,826.6 million for FY2012 on a 45.4% increase in sales of products under 「Dukang」 brand
- Sales of products under Siwu’s regular series more than tripled for 4Q2012 on a growing demand for economical products in times of economic uncertainty
- Gross profit margin improved to 37.5% for FY2012, from 36.0% a year ago due to a shift in product mix towards higher-margined 「Dukang」 brand products
- Group expects to strengthen its brand positioning to tap on pockets of growth in the baijiu industry

source:
source of article


full year report

[godjira1]

sgd

with a sales growth rate like mentioned, ROE of 10% (if all real, there is obviously the s-chip "truth discount"), I do not expect them to pay dividends.

(vested)

[rogerwilco]

Slightly confused when reading Dukang's FY 2012 presentation

In page 30 and 31, can anyone who have knowledge in the industry explain how they have wine output exceed production capacity?

Thanks

[dzwm87]

IMO, the utilization rate is just slightly above 100% - it is possible since production capacity is after all just an estimation and not an absolute number. It will be alarming if utilization rate is around 120% or more.

Moving forward, the question is whether the company is embarking on more CAPEX to expand production capacity?