Orient Century
This company was brought to my attention by Brandon. What attracted him to this was its huge cash holding. I see this as more of a lack of opportunity to deploy this large cash holding.
The education business in China should have plenty of room to grow. Raffles Education has been making headway into this area. Knowing that they are a shareholder in Oriental Century is comforting.
Oriental Century Limited ("Oriental Century" or the "Group"), through its subsidiary, is principally engaged in the provision of education management services to educational institutions in the People’s Republic of China ("PRC"). The Group serves basic educational institutions which comprise primary and junior high schools, as well as other educational institutions such as kindergartens, senior high schools and institutions providing ancillary courses such as summer camps and overseas study trips.
Following the liberalisation of the PRC education industry, the Group also invests in the setting up of private kindergartens and senior high schools under its well-established "Oriental Pearl" brand name, adopting an asset-light strategy and leveraging on its proprietary Modern School Management system.
Driven by a vision for education and passion for excellence, Oriental Century places primary emphasis on providing quality, comprehensive education in nurturing a future generation of talents for society. At present, the Group manages Oriental Pearl College, a renowned full boarding school in Dongguan city, Guangdong Province, established in 1994. We have also invested in and manage Nanchang No.3-Oriental Pearl High School, one of the leading private high schools in Nanchang city, Jiangxi Province. In 2006, the Group will also welcome the Dongguan-located Humen Oriental Pearl Kindergarten into its family of schools.
Now for some analysis into its fundamentals.
The last Net operating profit after tax stands at 30 million RMB.
At 42.5cts, its mkt cap is 401 mil RMB. Its got a cash holding of nearly 163 mil RMB. Minus away this and add debt, you get an Enterprise Value of 238 mil RMB (it has near zero interest bearing debt)
- ROIC = 70%
- Value of current cashflow performance (WACC=10%) = 304 mil RMB
- Cashflow discounted to infinity (WACC=10%,GDP grth=3%) = 434 mil RMB
- % cash of Mkt Cap = 40%
- Operating Cashflow yield = 7.58%
- Mkt cap /Equity = 1.9 times
- Raffles Education is a 27% major shareholder
I could see alot of synergy with Raffles Education in the picture. Overall, i think its a good set of figures with a good business. I know of zero skeletons so if folks think i missed out anything please feel free to highlight it to me. One gripe is that it doesn’t distribute dividends but i would rather it provide me with a consistent inflow of cashflow.Whether to distribute it or not is another story we bother about next time.
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[...] some time ago, I analyzed the full year earnings of Orient Century, and i state that it has a good cashflow yield, return on investment capital and a solid balance [...]
[...] some time ago, I analyzed the full year earnings of Orient Century, and i state that it has a good cashflow yield, return on investment capital and a solid balance [...]
[...] At 42.5cts, its mkt cap is 401 mil RMB. Its got a cash holding of nearly 163 mil RMB. Minus away this and add debt, you get an Enterprise Value of 238 mil RMB (it has near zero interest bearing debt) Read more… [...]