In this part of the analysis, I will present the financials of Dapai and do a quantitative analysis on them.
As Dapai is a China-based company, its financials are based in RMB. So, I had to convert to SGD and the rate I used was 1RMB=0.2SGD. This rate is just an approximate.
Firstly, the revenue is increasing from FY2007 to FY2008 and then dips in FY2009. The reason cited for this in the annual report is that there was softer demand from first-tier cities, especially Beijing and Guangzhou, due to its higher dependence on domestic consumption. Overall domestic consumption was weakened due to the global financial crisis.
The gross profit and gross profit margin decreased from FY2008 to FY2009 as the average-selling price (ASP) was decreased to fuel demand.
Looking at the Q2FY2010 results which were released on 11th Aug 2010, the revenue, gross profit, GPM, net profit, NPM all increased when compared to Q2FY2009 as the ASP went up and new models were released. Thus, I feel the dip seen from FY2008 to FY2009 is only temporary.
Looking at the balance sheet, Dapai is cash-rich with zero debt! The CCE stands at S$108.4 million for FY2009. The ROE and ROA is also high. Shareholder’s equity is also seen increasing. The NAV as at Q2FY10 is $0.30. The current share price is around $0.20.
Looking at the cash flow part, cash flow from operations is increasing throughout. Capex in FY2009 was at S$39 million due to cost of construction of new office cum factory building purchased in 2008. Dapai has low capex requirements and thus produces lots of free cash flow.