TL;DR Profitability looks fairly low, but it has been growing over the past few years. There are some indicators which could point towards the shares being undervalued, but strong retail headwinds might deter growth.
Source: The Edge Singapore
Business Profile
Source: The Edge Singapore
Cortina Holdings is an investment holding company that provides management services to its subsidiaries and associates, operating in both wholesale and retail. The wholesale segment is focused on the wholesale of the timepiece and branded accessories while the retail segment is engaged in retailing of the timepiece, branded pens and accessories. Overall, its distribution business consists of wholesale and agency businesses.
Income Statement
For 2018, the profitability of the business seems on the low end. However, the income statement has been improved over the years. Revenue and earnings have increased over time, and so has the profitability margins.
Balance Sheet
The firm's balance sheet is quite strong as well. This is evidenced by their high short-term liquidity, as well as low debt levels relative to earnings. Furthermore, these ratios have also improved time too. These are all very healthy signs.
Free Cashflow
The firm's free cash flow seems relatively good when we look at their FCF margin. This free cash flow is added by a relatively low reinvestment rate. However, the networking capital conditions had weakened free cash flows. Overall, free cash flow to equity is also on the low end due to a lot of debt repayment that occurred recently. I do believe, however, that dividends can be sustained. This is due to dividends not being too high out of the FCFE, and the company having a lot of cash balance already.
Overall, the firm seems rather efficient on their use of assets. The neutral ROE rating is due to the net profit margins, asset turnover and equity multiplier all having neutral ratings as well. The advantage is that these metrics had improved over time too.
Reinvestment rate, however, was negative. This is because of the negative net working capital changes which had increased free cash flow. What this means is that more cash was released then invested for such capital. If this trend continues, the firm could perhaps reinvest in more fixed assets for growth. Because of the negative reinvestment rates, the estimated growth in earnings had reduced.
Valuation
The firm might have a chance at being undervalued here. This is not just because of the relatively low multiples used here, but as well as the companion variables being strong too. For example, the P/E ratio is on the low end, as well as the PEG ratio. P/B ratio also seems to be low, with a decent ROE paired with it too. EV/EBITDA seems high, however, but this could be explained by the negative reinvestment rate. Free Cashflow Yields are on the low end, however.
TL;DR Profitability looks fairly low, but it has been growing over the past few years. There are some indicators which could point towards the shares being undervalued, but strong retail headwinds might deter growth.
Source: The Edge Singapore
Business Profile
Source: The Edge Singapore
Cortina Holdings is an investment holding company that provides management services to its subsidiaries and associates, operating in both wholesale and retail. The wholesale segment is focused on the wholesale of the timepiece and branded accessories while the retail segment is engaged in retailing of the timepiece, branded pens and accessories. Overall, its distribution business consists of wholesale and agency businesses.
Income Statement
For 2018, the profitability of the business seems on the low end. However, the income statement has been improved over the years. Revenue and earnings have increased over time, and so has the profitability margins.
Balance Sheet
The firm's balance sheet is quite strong as well. This is evidenced by their high short-term liquidity, as well as low debt levels relative to earnings. Furthermore, these ratios have also improved time too. These are all very healthy signs.
Free Cashflow
The firm's free cash flow seems relatively good when we look at their FCF margin. This free cash flow is added by a relatively low reinvestment rate. However, the networking capital conditions had weakened free cash flows. Overall, free cash flow to equity is also on the low end due to a lot of debt repayment that occurred recently. I do believe, however, that dividends can be sustained. This is due to dividends not being too high out of the FCFE, and the company having a lot of cash balance already.
Overall, the firm seems rather efficient on their use of assets. The neutral ROE rating is due to the net profit margins, asset turnover and equity multiplier all having neutral ratings as well. The advantage is that these metrics had improved over time too.
Reinvestment rate, however, was negative. This is because of the negative net working capital changes which had increased free cash flow. What this means is that more cash was released then invested for such capital. If this trend continues, the firm could perhaps reinvest in more fixed assets for growth. Because of the negative reinvestment rates, the estimated growth in earnings had reduced.
Valuation
The firm might have a chance at being undervalued here. This is not just because of the relatively low multiples used here, but as well as the companion variables being strong too. For example, the P/E ratio is on the low end, as well as the PEG ratio. P/B ratio also seems to be low, with a decent ROE paired with it too. EV/EBITDA seems high, however, but this could be explained by the negative reinvestment rate. Free Cashflow Yields are on the low end, however.