Design Studio released its 3rd Quarter financial results. Being in this industry, it's expected that revenue and profit recognition would be lumpy. Thus, any one quarter's result is not going to tell us too much about the full year's performance.
Nonetheless, since we're already 9 months into the year, we're left with the remaining 3 months for DS.
For 6 months ending June 2015
Revenue up 62.7%
PBT up 49.0%
For the 9 months ending September 2015
Revenue up 23.5%
PBT up 3.1%
PBT is now at $13.1million.
2014 full year PBT is at $23.8m while 2013 full year PBT is at $15.3m
Looking at how lump the profit recognition are, it is hard to say if DS will miss matching 2014's PBT for sure. However, to be conservative, let's assume they'll miss 2014's PBT but match 2013's instead.
Maintain Dividend yield?
Profits
2013 and 2014 saw the Directors declaring a 6.5 cent DPS. Assuming DS matches 2013's profit (which is not a tall order), it is likely that the Directors will continue to declare 6.5 cent of dividend.
Cash Flow
Cash
2013: $44.8m
2014: $48.4m
Profits
2013 and 2014 saw the Directors declaring a 6.5 cent DPS. Assuming DS matches 2013's profit (which is not a tall order), it is likely that the Directors will continue to declare 6.5 cent of dividend.
Cash Flow
Cash
2013: $44.8m
2014: $48.4m
9M2015: $56.4m
FCF
2013: $25.5m
2014: $20.3m
9M2015: $26.8m
Assuming cash flow status for DS is the same for 9 months and full year, the dividend declared for 2015 should be easy to maintain.
At 6.5 cent per share, this gives DS a 12% Dividend Yield at $0.54 price.
why is the PE ratio so low and yield so high for this stock
ReplyDeleteis it really very undervalued
or because its cyclical in nature and has low business moat?
Hi Felix,
DeleteI can't exactly explain why, but I can offer possible explanations like:
1. Lack of awareness (not the typical high-profile stock)
2. "Small/mid -cap" isn't as attractive as large caps.
Cyclical yes, but I don't think cyclical business = low PE (refer to other cyclical blue chips)
Business Moat, probably. But it depends how each one defines business moat. DS, for example, has a rather impressive portfolio of projects.
That track record is probably something the company holds dearly to, and probably one that helped them (and continue to) get more projects.