Highlights

THE INVESTMENT APPROACH OF CALVIN TAN

Author: calvintaneng   |   Latest post: Fri, 4 Dec 2020, 2:32 PM

 

DUTCHLADY = FACING SATURATION, STRUCTURAL CONSTRAIN & STRONG COMPETITION, Calvin Tan Research

Author:   |    Publish date:


Hi guys,

Let us study why Dutchlady is now in declension due to 3 Factors

1) Saturation of market

2) Structural constrain

3) Strong Competition ahead

 

1) DUTCH LADY IS NOW FACING SATURATION

 

Let us listen to the WISDOM OF ROBERT KUOK about the Quick Saturation of the Malaysian Market

 

THE COLONIAL MALAYA (From Robert Kuok A MEMOIR pages 186 & 187)

into which I was born in 1923 had a population of about three million. At independence in 1957, when I was busy driving the piles into the ground to establish the Kuok Group of companies, Malaysia's population was ten million. The small population of Malaysia seemed a great blessing for the young nation. But, at the same time, how much of a market can you enjoy in such a small country.


If you are a business man in the US, you have a giant market, where no man can tap its full extent in his short lifetime. The likes of Wal-Mart, Cargill and Archer Daniels Midland have all feasted on the larger opportunities in the US than any one generation could handle.


In the case of Malaysia, if you start a flourmill, the market is saturated in the twinkling of an eye. Then you must move sideways. So we did feed mills. In another blink you have reached your low ceiling again. Okay, I'll do vegetable oils now; that's a natural extension of animal feed. To produce feed you crush corn or soybeans for the meal, and you can take the oil that flows out and refine it for human consumption. So, we again moved sideways into a new core business because we had reached the limit. I call them shallow ponds.


In Malaysia, I always felt like a little fish swimming in shallow waters. As soon as I tried to dive, I would hit the concrete bottom of this man-made pond. So you need to swim laterally all the time. You couldn't go down deep. In the fishing world, the best fish are those that can dive deep, like the tuna. If I could only dive deep - and that could easily take up to 20 years of my life - I might not even have the energy to go sideways. But in Malaysia, the only choice open to me was to expand sideways, so I swam as fast as I could.


If I had been fortunate enough to be born in Indonesia, I would probably have taken a different course. There, the waters are deep, the fish are plentiful. Whatever industry I would enter in Indonesia, which has a huge population and landmass, would last my family three generations. So I envied what the businessmen of populous Indonesia were able to do. I had a seat at the flourmill table in Bogasari; but I was eager for more.

 

Image result for robert kuok photo

Robert Kuok The World' Shrewdest ...

 

 

 

Calvin comments:

In early days of Malaya when Robert Kuok operated the population was 10 million. Until 20 years ago the population was 20 million. After 20 years the population of Malaysia has now reached 30 million

So statistically the population has grown by another 10 million in 20 years or 5% a year

Now for that period Dutchlady has grown from Rm4.00 to a high of Rm76.00 or up 1,900% or 95% per year

EVERYONE CAN SEE THAT DUTCHLADY HAS NOW FACED SATURATION AS ROBERT KUOK EXPERIENCED

Listen to the experience of Robert Kuok again

"In the case of Malaysia, if you start a flourmill, the market is saturated in the twinkling of an eye. Then you must move sideways. So we did feed mills. In another blink you have reached your low ceiling again."

Robert Kuok experienced market saturation!

See more

" Okay, I'll do vegetable oils now; that's a natural extension of animal feed. To produce feed you crush corn or soybeans for the meal, and you can take the oil that flows out and refine it for human consumption. So, we again moved sideways into a new core business because we had reached the limit. I call them shallow ponds."

No sooner he started cooking oil it reached the limit  again. So he called Malaysia "shallow ponds"

DUTCHLADY HAS NOW OUTGROWN ITSELF IN A SHALLOW POND

 

Read again

"In Malaysia, I always felt like a little fish swimming in shallow waters. As soon as I tried to dive, I would hit the concrete bottom of this man-made pond. So you need to swim laterally all the time. You couldn't go down deep."

 

AND NOW WE KNOW THE REASON WHY DUTCHLADY IS EXPERIENCING EXACTLY WHAT ROBERT KUOK DESCRIBED CHUN CHUN (3iii Missed it)

 

2) STRUCTURAL CONSTRAIN

Dutchlady is not Coca Cola

While Warren Buffet's Coca cola can expand indefinitely into THE ENTIRE WORLD MARKETS

The same cannot be said about Dutchlady. Outside the domain of Malaysia few people are aware of Dutchlady

 

Dutch Lady Milk Industries Berhad (doing business as Dutch Lady Malaysia) (MYX3026) is a manufacturer of cow milk and dairy products in Malaysia since the 1960s. It was previously under Royal FrieslandFoods, a Netherlands-based multinational co-operative. Dutch Lady Malaysia is currently a subsidiary of FrieslandCampina, which was formed in December 2008 as a result of the merger between FrieslandFoods and Campina. Its current products include growing up milk, UHT milk, pasteurised milk, sterilised milk, family powdered milk, low fat and 0% fat drinking yoghurt, and low fat yoghurt

DUTCHLADY HAS STRUCTURAL LIMITATION BECAUSE IT IS ONLY CONFINED TO MALAYSIA'S VERY SMALL MARKET SIZE IN THE OVERALL BUSINESS OF ITS PARENT COMPANY

See

Royal Friesland Foods employs 15,312, of whom 10,000 work outside the Netherlands. The cooperative's leading brands are Appelsientje, Bonnet, Chocomel/Cécémel, Completa, CoolBest, Debic, DubbelFrisss, Dutch Lady, Extran, Frico, Friso, Foremost, Friesche Vlag, Frisian Flag, Fristi, Milli, NoyNoy, Peak, Pöttyös Túró Rudi, Rainbow, and Taksi.

 

Dutchlady is only One of 22 Sub brands of Royal Friesland Foods

So it cannot market its products to 21 other jurisdiction in which other leading brands are the market leader

SEE HOW STRUCTURALLY LIMITED THE CONSTRAIN AND THE IMPOSSIBLE EXPANSION FOR DUTCHLADY MARKET?

TO HAVE GROWN TO RM76.00 PER SHARE DUTCHLADY IS ACTUALLY THE BIGGEST BUBBLE NOW BURSTING

 

3) STRONG COMPETITORS

 

F&N BEING HIT BY SUGAR TAX HAS SEEN ITS REVENUE DROPPED

SO IT IS EXPANDING INTO MILK PRODUCTION IN A BIG WAY

See

F&N to turn into producer and exporter of fresh milk, its new growth pillar

 

 

 

By Amir Hisyam Rasid - 

 

KUALA LUMPUR: Fraser & Neave Holdings Bhd will import 4,000 dairy cows with a potential output of 40 million litres of fresh milk per annum under Phase One of its mega dairy farm project in Chuping, Perlis.

Its chief executive officer Lim Yew Hoe said the first box of fresh milk was expected to be rolled out within 24 months after the start of the project.

“In the longer term, Ladang Chuping will be capable of hosting 20,000 dairy cows to produce 200 million litres of fresh milk yearly, enabling the group with the capacity to export fresh milk from being a nett importer of fresh milk,” Lim said at a briefing on F&N’s results for the year ended September 30, 2019 today.

The project will be implemented in two phases with a total investment of RM850 million.

It will be financed by a mixture of internal fund, bank facilities and commercial papers.

F&N hopes to get the regulatory approval in the next six month for its acquisition of 4,454-ha leasehold Chuping land.

Lim said the company was banking on fresh milk as its new pillar of growth as it saw more than 50 per cent potential to grow the consumption from the current consumption of three per cent.

“Currently, the average Malaysian consumes 49 litres of milk a year valued at some RM5 billion, of which 78 per cent is in the powdered milk format. Fresh milk consumption is only a fraction of total dairy consumption.

“The integrated dairy farm will propel the group’s ambition of becoming a major player in the health and wellness segment to the next level, with fresh milk as its new pillar of growth,” he added.

With the new integrated farm, Lim said F&N would support Malaysia’s health and food security agenda and at the same time be self-sufficient in the supply of locally-produced fresh milk.

“When fully completed, the farm located on 4,454ha site will contribute towards the nation’s food security, providing 200 million litres of fresh milk and up to 5,000 livestock annually.

“The farm will also allow the group to achieve self-sufficiency , thus reducing dependence on imported milk and to provide Malaysians with a choice of nutritious and affordable fresh milk and dairy products,” he said.

Currently, Lim said Malaysia’s total dairy production was under 40 million litres with self-sufficiency at only three per cent in 2015, citing the Department of Veterinary Services.

F&N recorded a 5.3 per cent growth in revenue to RM4.08 billion from RM3.87 billion in 2018.

It achieved its highest ever pre-tax profit of RM533 million, a 25.7 per cent hike from RM424.1 million last year.

 

THIS IS THE DOOM OF DLADY

F&N will produce 40 million liters of milk which is 100% current milk consumption of 40 million liter milk in Malaysia

THIS WILL COLLIDE HEAD ON WITH DLADY

F&N COST WILL BE LOWER AS THEY BUY LAND & ANIMALS FOR OWN PRODUCTION

BOTH DLADY, F&N & NESTLE WILL FACE CANNIBALISM AND MARGIN COMPRESSION

THE WORST HIT WILL BE DLADY WITH NO MOAT

 

MAYDAY! MAYDAY!! MAYDAY!!

See

 

However, if you would like to share the information in this article, you may use the headline, summary and link below:

 

BALADNA FROM QATAR WILL SET UP THE LARGEST DIARY FARM IN MALAYSIA IN 2 YEARS' TIME

https://www.dairyreporter.com/Article/2019/10/23/Malaysia-to-set-up-its-biggest-dairy-farm-with-help-from-Qatar

 

Already facing fierce competition from Nestle Milk & Goodday Milk as well as Anlene (made famous by Datuk Michelle Yeoh, Fernleaf (NZ) & many many others Dutchlady will now go into a decade of descend

As it went up so it will come down again to more reasonable price level

The NTA, EPS & DIVIDENDS ONLY Support a Price of Rm10 to Rm15 for now

Any price above that is over paying

 

Best regards

Calvin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Labels: DLADY

Related Stocks

Chart Stock Name Last Change Volume 
DLADY 36.62 -0.18 (0.49%) 19,200 

  2 people like this.
 
Icon8888 Oh my god back to 2015 price
18/01/2020 12:48 PM
TECHfullyBREWED https://modernfarmer.com/2019/11/rising-milk-prices-are-coming-from-a-surprising-source/
18/01/2020 2:20 PM
calvintaneng They say

"If you know the horse you are riding on is dead the best thing to do is to dismount "

In other words better sell dutchlady before it crash further
18/01/2020 11:03 PM
Harry hold dutch lady far better than the rubbish netx. anytime will close shop
18/01/2020 11:14 PM
uptrending Dutch Lady had a bonus issues of 3 for 1 in 2002

Inthe early 90s it was traded at 6-7 b4 bonus... It went up to 76 ex the 2002 bonus, meant 300 b4 bonus.. It gone up by 40-50 times..no yet taken in handsome dividends.. It is a true Champion...
18/01/2020 11:24 PM
FutureGains Inthe early 90s---30 years oledi

got millions?
18/01/2020 11:39 PM
FutureGains hold dutch lady far better than the rubbish netx. anytime will close shop


how mnay dlady u have? u bot 78?
18/01/2020 11:40 PM
calvintaneng Dlady days are numbered like Kodak or Polaroid
Time to sell and get out
18/01/2020 11:45 PM
19/01/2020 12:02 AM
jjohnchew Post removed. Why?
19/01/2020 2:25 PM


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