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Historically the company delivered > 50% ROE. Last year was a bad one with 12%. But at 12% it is much better than most Bursa companies. The question is whether you believe that the business fundamentals has changed so that the historical performance is no longer valid or whether last year was an anomaly.
Ascribing a P/E multiple range of 18-20x, which is in line with Fraser & Neave’s (FNH MK, NR) forward valuation but at a discount to Farm Fresh’s (FFB MK, BUY, TP: MYR3.06), RHB research value DLM at MYR46.40-51.60.
Dutch Lady’s short-term technicals look weak, with bearish momentum and resistance near RM28, support around RM27. Fundamentals remain solid with strong cash reserves, steady dividends, and good capital returns. Q1 profit dipped due to transition costs, but valuation (~18× P/E) suggests about 23% upside to a RM34 target. Watch for negative free cash flow, which could affect growth if it continues.
