KLCI Stock - TANJONG / 2267 - 2010 Quarter 4

TANJONG PUBLIC LIMITED COMPANY

Listing Date: 24.12.1991
Market: MAIN
Sector: TRADING/SERVICES
Par Value: 7.5 p
Major Industry: Recreation
Sub Industry : Miscellaneous Recreation

TANJONG PUBLIC LIMITED COMPANY is an investment holding company. The Company’s subsidiaries are engaged in power generation, gaming, leisure and property investment. The Company operates in four segments: Power Generation relates to the ownership, development and operation of power plants; Gaming comprises the Numbers Forecast Totalisator (NFO) and Racing Totalisator (RTO) businesses; Property Investment relates to the leasing and maintenance of Menara Maxis, and Leisure refers to the operation of the TI resort and the film exhibition business. In March 2009, the Company announced that KN Power Services Limited is its subsidiary undertaking. On March 30, 2009, it incorporated a wholly owned subsdiary, KN Holdings (L) Ltd., with 55% of the share capital of KN Holdings held by TEH Ventures (L) Ltd (a wholly owned subsidiary of Tanjong) and the remaining 45% held by Aljomaih Automotive Company Limited.

OSK Target Price: 18.6
My Target Price: 17.6+0.9=18.5 (PE 10, EPS 1.76, DPS 0.9)
My decison: NOT BUY (unless price <=17)
Reason: Overvalue but dividend rate 5% (on RM18)

My study based on 2010 Quarter 4 report (number in '000):-
- Power Generation revenue decreased due to a reduction in energy billings by Malaysian power plants, offset by increased revenue from overseas power plants. Gaming revenue decreased due to an increase in the Numbers Forecast Operations ("NFO") prize payout ratio from 63% to 69%
- Group profit before taxation for the current quarter increased due to refinancing costs totalling RM141 million on two Egyptian power plants which were incurred in the corresponding quarter and lower revaluation surplus recorded in the current quarter
- The operating profit of Power Generation increased due to the increased revenue, lower plant maintenance expenses, reduced corporate and business development costs and the non-recurring RM85 million windfall profit levy which was charged in the previous year
- Gross sales proceeds from the NFO business increased due to sixteen additional draws but the Gaming segment operating profit however reduced due mainly to an escalation in racing totalisator expenses
- In the Leisure segment, improved attendances and higher spend in Tropical Islands together with the full year contribution from TGV Cinemas Sdn Bhd, resulted increase in revenue and a significantly lower operating loss
- Net investment income is lower mainly due to the recognition, in the previous year, of investment gains from the disposal of the Group’s interest in Arqiva
- Estimate next 4Q eps after 2010 Q4 result announced = 1.76 (5% increase from 1.6783), estimate PE on current price 18 = 9.72(DPS 0.9)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.43*4=1.72, estimate highest/lowest PE = 9.98/9.01 (DPS 0.9)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.43*4=1.72, estimate highest/lowest PE = 9.26/8.2 (DPS 0.9)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.43*4=1.72, estimate highest/lowest PE = 8.8/7.21 (DPS 0.9)
- Estimate next 4Q eps after 2009 Q4 result announced = 1.15, estimate highest/lowest PE = 12.09/10.43 (DPS 0.9)

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