Monday, February 15, 2010

Cerebos Pacific Ltd Part 1

Recently, I came across this interesting company, Cerebos Pacific. To me, it appears to be a good company for long term investments, both for capital gains and for dividend yield. However, my understanding of true fundamental analysis isn't strong. This company caught my eyes (like Breadtalk) because it sells stuff that I use frequently, stuff that I know, stuff that is commonly found in the kitchen.

For me, I'm starting to like buying into companies I can see in my everyday life. Examples are Starhub, Singtel, SPH, Breadtalk and SingPost. This is one of my criteria nowadays before delving further into it's financial statements and technical charts. Another good example would be Aztech, of which we can see their products in Harvey Norman and Challenger. Cerebos Pacific came across as interesting to me because of their products, which I use frequently.

The main attraction to me is Cerebos' leading health supplement, BRANDS. This is a product which I have been using since I was a kid! And I swear by its effectiveness in leading me to my academic success! FYI, Brands is at its 175th anniversary in the year 2010!

Another interesting product Cerebos Pacific has in Singapore is the Woh Hup range of sauces! I have seen my mum using this frequently, again since I was a kid. However, I do realise that there's a equally superb competitor in Lee Kum Kee.

Finally, a product that I used while doing my student exchange in Germany is Asian Home Gourmet. The taste is excellent, and the sauces in the packages, the thoughtfulness of having sauces for the whole course of the meal, all appealed to me.

The above are merely brands in Singapore. Cerebos Pacific has also made forays into Vietnam, China, Australia, Malaysia, Thailand, etc, and sells stuff like coffee or western sauces and gravy as well, leveraging on their experience in sauces. In addition, Cerebos Pacific is making headways in selling Brands Essence of Chicken in China, where academic success is paramount and of utmost importance to most students.

Vision of Cerebos Pacific:
To be the leading food and health supplements enterprise in the Asia Pacific region by creating value for our employees, our customers and our shareholders.

Mid Term Goal:
Expand production capability (done)
Removing barriers to growth

Long Term Goal:
Making Cerebos more immune to cyclical economic patterns and uncertainties.

The dividend given by this company has been a fixed 25 cents per share since 2005. This is made up of 6 cents dividends plus 19 cents special dividends every year. This is indeed attractive, and would do well to contribute to my dividend portfolio, although I would say this is a good company to have in the investment portfolio as well.

The nice dividend amount appears to be sustainable if what the company said is true; there still plenty of opportunities to increase market penetration in its current markets without further expansion.

This concludes my initial view on Cerebos Pacific. In Part 2, I would attempt to discuss, using my layman method, their marketing strategies, and my thoughts on their future plans. In addition, I would also take a simplified look at their financial statements, and do a discounted cash flow valuation for their intrinsic value.


  1. Hi JW,

    Thanks for the intro. Waiting for the most crucial aspect - the numbers! Thanks!


  2. Hi MusicWhiz,

    thanks for visiting. I will try to churn it out asap :)

  3. i've once held a quiet chip called bonvests, there and then it is bought at 50c, the deal in there is that it has the burger king franchise in SG,owns liat towers, yushun 10, a hotel along scotts road and has little debts

    the surprise came when they issued 6 cents dividends and is truly worth it for me then

    i sold it on reading a news article which says burger king, the franchise owner is setting up shop in ion orchard and intends to setup more joints competing with bonvests, in hindsight probably too hasty/impulsive, i sold at around 75c & today it has gone up to around $1 which makes the dividend yield unattractive

  4. Hi andrew,

    thanks for visiting. I guess we have to review the reasons we buy or sell stocks, be it from the technical or fundamental camp. Then we learn from there :)

    I once had DBS and OCBC at half their current price as well :)


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