Poh Kong (5080) Pk TOMEI (7230)

Key Summary

Both shares trade at attractive price to earning ratio. TOMEI, having an International presence which expand rapidly during past few year, was recording declining net profit margin and ROE. Poh Kong, while having strong performance these past year, seemed to overpay its director.


Before the analysis 

The jewellery retailer industry seem to be a never-will-lost-a-cent kind of business. Poh Kong and TOMEI, the two industry leader, had never recorded a year with loss. Hence, the question left for the investor, is which one outperform the other. In order to do a comparable study, we need to single out the numbers that is affected by their size, ie : Total revenue, profit after tax, net earning per share. 

Hence, the ratios that can gauge the relative strength of the management team , would be ROE, Net Profit margin, Average Revenue per store  ( for major ) , and Fixed asset utilization factor (revenue/fixed asset), Sales/inventories ratio (minor consideration) . Other factors that may aid in the decision are dividend rate and  director effect (net profit / total director remuneration package).


The Key Parts.

Note:
* Poh Kong had undergo major share capital expansion, hence PER based on non-diluted earning per share before cannot give a true picture on companys earning power.
** TOMEI group has 70 retail outlet in Malaysia with 18 retail outlet overseas (7 in Vietnam, 11 in China) . Whether the overseas retail kiosk contribute the same revenue per store for TOMEI, is a subject worth exploring further.

The Good About POHKONG,
The net profit margin is better,
The current PER is more attractive.
It achieved a higher revenue per retail store.

The Good about Tomei.
Average Return on Equity is higher.
Asset utilization, revenue/inventory, director factor are all better.


In Conclusion
Both companies are distributing dividend at the rate comparable to the rate received from Fixed Deposit. The major exception is that, the FD rate fluctuate according to Bank Negara Policy, while for Both companies, with ROE well above 10%, you can expect your dividend rate (related to historical cost of purchase) will keep growing at foreseeable future.

The choice of choosing which company to invest is rather personal, but if we are confident in the future of gold and jewellery industry as a whole, we could consider a diversification by investing in both the largest and second largest player in the field.

Tomei Bursa Saham Link 
PohKong Bursa Saham Link