When I saw this stock rise on its first listing date at 49.9%, I was intrigued. I got curious of its fundamentals. So I studied the prospectus and made a quick valuation.

Golden Haven Memorial Park in a nutshell is;

• One of the leading developers of memorial parks and columbarium vaults in the Philippines in terms of land development.
• Owned by Fine Properties, a holding and investment company owned by the family of former Senator Manny Villar.

According to them, revenues and net income has grown at 16.50% and 4.50% respectively compared in 2014. There’s money in death that’s what I can say. Anyway, I like anything that can grow consistently so let’s look at the numbers.

Revenue And Net Income

Fig. 1 CAGR is at 10.68%.

Fig. 2 CAGR is at 13.11%

3 years of data confirms that Revenue and Net Income is increasing at a CAGR of 10.68% and 13.11%. So probably at the end of this year, we should expect an estimated Revenue of 744.13 Million pesos and a Net Income of 170.93 Million pesos.

At 200,000 weighted average shares, HVN’s Earnings Per Share is shown below.

Fig. 3 EPS

The Financial Ratios computed from the Income Statement shows healthy numbers except the SG&A to Gross Profit.

Fig. 4 Profit Margins

Overall, I can say that HVN has a long-term competitive advantage.

Assets, Liabilities And Book Value

HVN’s book value dropped significantly last year.

Fig. 5 Book Value Per Share

This is because HVN paid 650 Million pesos of dividends last year. In my opinion, HVN should have used that money instead to grow more equity.

Since the dividend payment has shrunk HVN’s equity, The Return on Equity in 2015 has risen significantly.

Fig. 6 ROE

To check, I looked at the Return on Total Capital and found that it shows a healthy percentage ratios in the 3-year period.

Fig. 7 ROTC

Dividends declared amounted to 650 Million Pesos. This shrunk the Retained Earnings from 1.066 Billion Pesos down to 417.19 Million Pesos.

Fig. 8 Retained Earnings

Liquidity and solvency ratios also look good but last year showed bad numbers. This is also because of the dividend payment they made.

Fig. 9 Liquidity/Solvency Ratios

As I’ve said again, they should have increased equity rather than paid dividends in my opinion.

But still, I can say that HVN has a healthy Balance Sheet.

Cash Flow And Change In Working Capital

Fig. 10 Cash Flow

The reason for the negative Cash Flow from Operating Activities in 2014 is because of the high Change in Working Capital compared to the Operating Profit Before Working Capital Changes.

Fig. 11 Working Capital

This may be attributed to the significant increase of memorial lot inventories in that year.

It is also notable that HVN has no debts last 2013 and 2014. HVN started to take out bank loans last year to fund capital expenditures.

Overall, I can also say that HVN has a healthy cash flow.

Stock Price Valuation

I projected the Net Income this year to be 170.93 Million Pesos based on a CAGR of 13.11%. With a 494,117,649 outstanding shares, I computed a 0.35 earnings per share. At 10.50 Pesos listing price, that puts a P/E of 30.35 and P/BV of 15.44.

Buying it at 10.50 Pesos gives me a projected 3.29% return rate and a safety margin of around 6.48%.

So my opinion is this, HVN needs to at least achieve four times its previous earnings this year to be fairly valued based on its listing price. HVN must consistently increase their earnings and sustain their growth to be a good stock to hold. That’s the challenge of this business. If they can do it, then I can assume that this company will be a good long-term investment.

Final Thoughts

I think this business depends on a large mortality rate. If a lot of people die or buy memorial plans, then definitely the company will earn a lot of money. Let’s see if there’s money on servicing dead people. Sounds eerie isn’t it?

This concludes my Golden Haven stock review.

If you have any questions or reactions, please don’t hesitate to leave a comment below.

Happy investing!