KLCI Stock - FAVCO / 7229 - 2010 Quarter 3

Company Info

Market Capital (Capital Size)	187,536,281 (Small)
Par Value	RM 0.50

My Analysis

Forecast P/E now	(1.06-0.04)/0.1362 = 7.49 (Moderate)
Target Price	1.09+0.04 = 1.13 (PE 8.0, EPS 0.1362, DPS 0.04)
Decision	NOT BUY unless price below 1
Comment	Revenue second consecutive quarter increasing but still lower than preceding year corresponding quarter, profit second consecutive quarter increasing, higher than preceding year corresponding quarter also, free cash flow increasing, strong cash, outstanding order book decreased compared to year 2008 and 2009, profit margin increasing, liquidity ratio maintained at low level, gearing ratio decreasing but still at high level
First Support Price	0.98
Second Support Price	0.8
Risk Rating	HIGH

Accounting Ratio

Return on Equity	15.93%
Dividend Yield	3.77%
Profit Margin	10.49%
Tax Rate	25.61%
Asset Turnover	0.7712
Net Asset Value Per Share	1.06
Net Tangible Asset per share	1.0
Price/Net Tangible Asset Per Share	0.97
Cash Per Share	0.56
Liquidity Current Ratio	1.2017
Liquidity Quick Ratio	0.5843
Liquidity Cash Ratio	0.2499
Gearing Debt to Equity Ratio	2.2394
Gearing Debt to Asset Ratio	0.6913
Working capital per thousand Ringgit sale	17.5%
Days to sell the inventory	217
Days to collect the receivables	106
Days to pay the payables	140

My notes based on 2010 quarter 3 report (number in '000):-
- For the current period ended 30 September 2010("Q3 2010"), the Group recorded revenue of RM284.8 million with profit before tax of RM22.5 million as compared with revenue of RM359.9 million with profit before tax of RM23.1 million in the preceding period ended 30 September 2009("Q3 2009"), the decrease was mainly due to decrease in sales resulted from slow order intake in Year 2009 attributed to global slowdown

- The Group recorded a profit before tax of RM12.2 million for the current quarter as compared to the profit before tax of RM6.4 million in the preceding quarter. The increase was mainly due to increase in sales

- Estimate next 4Q eps after 2011 Q3 result announced = 0.1362, estimate PE on current price 1.02 = 7.2(DPS 0.04)
- Estimate next 4Q eps after 2011 Q2 result announced = 0.1602*0.85 = 0.1362(450 million equal to 15% decrease from 2009 Q4 cum_eps), estimate highest/lowest PE = 8.37/5.58 (DPS 0.04)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.1442*0.7 = 0.1009 (30% drop from 0.1442, revenue drop and margin expect will not increase much), estimate highest/lowest PE = 8.42/7.04 (DPS 0.04)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.1442(10% drop from 0.1602, revenue drop and margin expect will not increase much), estimate highest/lowest PE = 6.93/4.92 (DPS 0.04)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.1442, estimate highest/lowest PE = 5.76/4.99 (DPS 0.025)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.1442, estimate highest/lowest PE = 6.45/5.49 (DPS 0.025)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.1442, estimate highest/lowest PE = 8.11/5.72 (DPS 0.025)

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