KLCI Stock - IJM / 3336 - 2010 Quarter 4

Market Cap : 1334442977*4.75 = 6,338,604,140.75 (Large)
NTA per share : (5129221-74804)/1347819 = 3.75
P/BV : 4.75/3.75 = 1.2667
Forecast P/E now : (4.75-0.11)/0.2236 = 20.75 (High)
ROE : 5.15% (Low)
DY : 0.11/4.75*100 = 2.32% (Low)
Fixed Asset Turnover(3 year) : (0.3196+0.3863+0.4159)/3 = 0.3739 (Low)
Liquidity Ratio : 5598766/2685225 = 2.085 (Moderate)
Receivables Collection Period : (2173187+2103848)/2/(4013530/365) = 194 days
My Target Price : Not interested unless revenue recovered
My Decision : NOT BUY
My Comment : Revenue dropping, good cash flow, debt decreased, navps increased
Technical Support Price : 4.4, 4.3
Risk Rating : HIGH (prospect of overvalue)
OSK Target Price : 5.21 (27 May 10)

My notes based on 2010 Quarter 4 report (number in '000):-
- The Group recorded a decrease of 26.5% operating revenue for the current quarter over the corresponding quarter of the preceding year. The decrease was mainly due to lower construction revenues as the Group’s major construction projects have reached the tail-end of its project lifecycle while construction works at major projects such as the Grand Hyatt in Kuala Lumpur and new India projects are expected to go full-swing only in the coming financial year. In addition, lower selling prices and lower market demand for building materials have also resulted in the Group’s Industry division reporting a 20% decline in revenue
- On the other hand, the Group’s operating profit before tax for the current quarter rose 139.7% compared to the preceding year’s corresponding quarter as all of the Group’s main operating divisions reported higher profits. The most significant increase was recorded by the Group’s Infrastructure division which recognised foreign exchange translation gain of approximately RM57 million in the current quarter in respect of its offshore US Dollar-denominated borrowings
- For the year-to-date, the Group achieved an operating revenue of RM4,014 million which represented a decline of 12.8% compared to the previous year’s corresponding period as revenues from the Construction, Plantation and Industry divisions fell by 29%, 17% and 16% respectively. The lower Plantation revenue was mainly due to the drop in prices of crude palm oil (CPO) from an average of RM2,641 per ton in the previous year’s corresponding period to RM2,246 per ton in the current year-to-date while the lower Construction and Industry revenues were due to the reasons mentioned above. On the contrary, the Group’s operating profit before tax rose 9.26% compared to the previous year’s corresponding period. This was mainly attributable to significantly higher margins in the Group’s Property, Industry and Infrastructure divisions
- The Group recorded a 1.4% growth in pre-tax profit despite a 7.5% decline in operating revenue compared to the immediate preceding quarter. This was mainly attributable to the foreign exchange gain of RM57 million mentioned in Note B1 above
- Estimate next 4Q eps after 2010 Q4 result announced = 0.2484*0.9 = 0.2236 (10% drop, exclude foreign exchange gained), estimate PE on current price 4.75 = 20.75(DPS 0.11)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0621*4 = 0.2484 (expecting revenue and profit recover hence no decrease on eps), estimate highest/lowest PE = 20.53/17.43 (DPS 0.05)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.2556, estimate highest/lowest PE = 19.13/16.55 (DPS 0.05)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.271, estimate highest/lowest PE = 25.13/15.68 (DPS 0.05)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.3251, estimate highest/lowest PE = 19.53/16.15 (DPS 0.05)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.2612, estimate highest/lowest PE = 21.06/12.44 (DPS 0.25)

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