✨ BJCORP Accounting Deep-Dive - Part 3d: Three Statement Analysis of the Listed Berjaya Companies
A financial deep-dive into each of the listed Berjaya companies - the financial counterpart to our BJCORP Part 2 report
At long last, we come to the concluding final parts of this monstrosity of an equity research report. In total, over 35,000 words have been typed out in the previous 6 reports. These final two reports should bring the total tally to over 50,000 words (i.e. 100 pages). To recap:
In Part 1 we explored what the base-case investment thesis was for BJCORP. Basically, the idea was that you could participate in a potential 300% upside, while bearing very little downside risk.
In Part 2, we learned about all the respective Berjaya listed companies that huddled under its corporate umbrella. This was important in order to gain the background context behind each of their respective operating businesses, the sectors they occupied, and how each of them contributed to the wider group. It also provides operational context behind their reported numbers at the consolidated Group level.
Along the way, we also took a peek at one of these Berjaya listed companies - 7-11 Malaysia, which trades under the ticker SEM. The reason why I raised attention to this company specifically is because I believe it is the crown jewel amongst all of the Berjaya business assets - which we shall see why later in this Part 4 report.
In Part 3a, we did a deep-dive into the prior 10 years of BJCORP’s P&L statements. We discovered hints as to why their historical share price performance has been significantly underperforming throughout the past decade.
In Part 3b, we did a similar deep-dive into the prior 10 years of BJCORP’s Balance Sheets. Here we gained more operational context around their capital position in each of the respective years, and saw a rather unusual trend of consistent disposals of their businesses.
In Part 3c, we looked intently into the prior 10 years of BJCORP’s Cash Flow Statements. It was here that we pulled together everything we had learned so far in both Part 3a and Part 3b, and concluded that the Group’s historical dismal profit performance could be attributed to them focusing on downsizing the conglomerate rather than growth.
In this Part 3d report, we shall do an abridged three statement analysis of the respective Berjaya listed companies - and in the Part 4 report, we shall finally explore how BJCORP might be able to achieve the mythical 3,000 upside which we discussed in Part 1.
For convenience’s sake, you may click the links below to access each of the above reports:
Initially, Part 4 was meant to be a single report covering both the abridged three statement analysis of all the relevant Berjaya listed companies and the final 3,000% upside investment thesis for BJCORP. However, the report ended up being over 16,000 words long - so I decided to split it into the two reports released today - Part 3d (8,000 words) and Part 4 (8,800 words).
As mentioned above, in this Part 3d report we’ll be doing an abridged version of the three statement analysis for the rest of the Berjaya listed companies relevant to the wider BJCORP investment thesis. Also, once we have the entire context of the Group, we’ll see how BJCORP can synergize its business assets to try and attain the 3,000% upside that we mentioned in Part 1.
If you’ve stumbled upon this report for the first time, I would highly recommend heading back and taking a gander at Part 3a for the background context behind this Part 3d deep-dive. For the benefit of those who have already gone through the above reports, I won’t reinvent the wheel and will spare you a regurgitation of the background context. Let's dive right in.
Company’s historical financials on TIKR (free sign-up required)
BJCORP’s Listed Companies’ Information & Financials:
(If you’d like more detail about any of the above Berjaya companies, please click this link to read my Part 2 report where I cover each of their operational businessses in detail.)
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Three Statement Analysis of the Listed Berjaya Companies
For the uninitiated, a “three statement analysis” refers to the analysis of all 3 of a company’s main financial statements - i.e. the P&L statement, the Balance Sheet, as well as the Cash Flow Statement. This is the bread-and-butter of any equity analyst’s workflow, and is what we did for the BJCORP parent company through the previous Part 3a to Part 3c reports.
Obviously, I don’t intend to do a similarly deep dive for all of the remaining Berjaya listed companies (which we covered in Part 2), as it would consume an inordinate and arguably unnecessary amount of time. However, we will be doing an abridged version of the three statement analysis for them in this report - by utilizing the margin analysis table in the screenshot above taken from my financial model (attached below for paid subscribers).
As we have done in my Part 3a to Part 3c reports, I will be highlighting in yellow all the potential problem areas in the model. Then, we shall expound on all of these problem areas to provide context for the final potential 3,000% upside investment thesis, which we shall explore at the end of this report.
Once again, the best way to gain meaningful interpretation over this monstrosity of a dataset (i.e. this financial model) is to start with margin analysis. As I’ve mentioned in Part 3a, doing this allows us to home in on the various areas of potential concern in the financial model, while also providing a quick snapshot of how the company’s historical performance has been like - e.g. what their working capital position was over time, how much of CAPEX represented maintenance vs growth, have they been paying out dividends from debt, etc. This then enables us to assign possible future scenarios given the context of their present business operations. By process of elimination, we can then drill down into just a handful of key factors, and focus the remainder of our efforts on analyzing those.
Notably, we will not be performing this abridged three statement analysis for all of the listed Berjaya companies which we discussed in Part 2. Some of them, like Atlan Holdings Berhad and Berjaya Philippines Inc, have zero relevance to the wider BJCORP investment thesis. Hence, we shall only be focusing on those that are relevant to the wider BJCORP investment thesis - which to be fair, is most of them.
To recap, the listed Berjaya companies that we shall be analyzing in this report are:
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