Dantax A/S – Q1 2016

CPH:DANT – 168 DKK

1kr50öreDantax A/S is a Denmark-based company primarily engaged in the development and marketing of television, video and audio equipment. Additionally, it is engaged in the air traffic control. Its product portfolio includes equipment for television, liquid crystal display (LCD) television (LCD), digital versatile discs (DVD) players, LCD/DVD Combo television, turntables, loud speakers, audio and portable electronics, household equipment, high-definition multimedia interface (HDMI) cables, projection screens, television furniture, television brackets, clock radios, as well as Ipod and Iphone docking stations, among others. Its are sold under such brands, as Dantax, Raidho, Scansonic and Harmony. The Company is primarily active in Greenland, Iceland, Finland, Sweden, Norway and Denmark. The Company operats through its subsidiary Dantax Radio A/S and Nordic Air A/S. In July 2013, Company’s subsidiary Dantax Radio A/S divested its 49% holding in a Swedish company, Teleton Magnetics AB. – Google Times.

1. Adequate margin of safety (criterion a) or b) must be met): 

a)

  • P/NCAV < 1x
    • 0,87x 

&

  • EV/Operating earnings(5y&10y) < 3x
    • 5y =  -2,8x 
    • 10y = -3,8x
      • Negative EV and positive operating earnings 5y & 10y.

b)

  • P/NCAV < 0,76x
    • 0,87x X

&

  • NCAV-burn rate  > -25 % for Qx – Qx-4 and Qx – Qx-1
    • Qx – Qx-4 = +223 % 
    • Qx – Qx-1 = -3 % 


* I have adjusted NCAV and EV to reflect the recent dividend of 10 DKK per share.

2. The risk of permanent loss is low:

2.1 The risk of bankruptcy is low (criterion a) or b) must be met):

a)

  • Debt/Equity < 25 %
    • 0 % 

b)

  • Z-score ≥ 3
    • 4,9

&

  • Debt/Equity < 50 %
    • 0 % 

2.2 The company’s business model is not totally unprofitable (criterion a) or b) must be met):

a)

  • Positive retained earnings:
    • 32 MDKK 

b)

  • Positive aggregate operating income for the last ten years:
    •   10,5 MDKK  

3. The risk of share dilution is low (criterion a) or b) must be met):

a)

  • Share dilution < 2 % for Qx – Qx-4 and Qx – Qx-1
    • Qx – Qx-4 = 0 % 
    • Qx – Qx-1 = 0 % 

b)

  • The company has net repurchased shares during the last ten years:
    • DANT has net repurchased shares during the last ten years.

4. The risk of fraud is low (overall assessment on the basis of the answers below):

  • Today’s management has not historically been linked to fraud:
    • DANT’s current management have not historically been linked to fraud. 
  • The company is not mainly Chinese (business and/or majority shareholder):
    • Danish company and majority shareholders.
  • Company data exist for the last ten years:
    • Yes. 
  • The company has repeatedly allocated capital to shareholders (dividends and/or share buybacks):
    • DANT has several times during the last ten years paid shareholders dividend and bought back shares.
  • The CEO and/or insiders have ownership incentives (worth of shareholding / salary + bonus > 3x)
    • The company doesn’t specify the compensation on a individual basis. However, the market value of total insider ownership (43 MDKK) in relation to the the total cost for personel (7 MDKK for 2015) is:
      • 6x. 

Other notes:

  • P/Net cash = 1,2x
  • John Peter Jensen (former CEO and currently a director) owns 72,9 % of the shares outstanding. The current CEO Peter Bøgh Jensen owns 13,1 % of the shares outstanding.
    • The company currently has 1,4 % of the shares outstanding in treasury.
  • DANT recently sold its 50 % ownership in Nordic Air A/S and airplane to John Peter Jensen Holding A/S (in Danish). The total price of 39,2 MDKK, equal to the assets book value, was paid in cash. John Peter Jensen (director), also the largest shareholder of DANT, abstained his right to vote for the completion of the transaction at the extraordinary general meeting. The cash from the transaction is said to be used for future acquisitions.
  • Other analysis of DANT:
  • DANT is a nano-cap stock: 7 M$ in market capitalization. The trading is very illiquid.

MoS

Disclosure: The author is long CPH:DANT when this analysis is published.

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