Cash-Cow PANAMY (3719)

PANAMY (3719) or its full name Panasonic Manufacturing Malaysia Bhd is publicly listed in the Malaysian market in 1966. After 50 years, it is still generating cash like clock-work.

I was surprised that 90 % of its equity is coming from profits. In other words, the shareholders only contribute about 10 % of the capital while the rest is coming from retained earnings. It seems to me that the company is generating more cash faster than it could spend.

Cash is king. – Najib

Its return-on-equity, ROE, is 17 % with no practically no debt. Using the rule of 72, PANAMY could double its assets (mainly cash) in under 5 years without the need to increase its liabilities.

ROE and rule of 72

Example: with a return of 17 %, you could double your capital in less than 5 years (72 / 17 = 4.23 years).

This is equivalent to saying that: If you were the owner who had $ 1 million invested, you were entitled to $ 200 thousand of the earnings each year.

The engine of growth is still on

Its 5-year and 10-year earning growth rates (here is how I calculate earning growth rate) are positive, 9 % and 8 % respectively. These numbers are one of the main reasons for stock to double.

Cash-cow PANAMY: Idiot-proof business

PANAMY's products

PANAMY’s products

PANAMY is an idiot-proof business with well-known brand where you generate more money than you can spend by selling fans, rice cookers, vacuums, etc. In my home at Miri, I found Panasonic products everywhere.

Panasonic at home

Panasonic products at home

It is an ideal stock for retirement. Another good news is, it pays good dividends too at around 4 %.

Final though

Let see if its stock price doubles in 5 years time.