KLCI Stock - IOICORP / 1961 - 2011 Quarter 1

IOI CORPORATION BERHAD

Par Value

:

0.10

My Forecast P/E now	:	(5.81-0.17)/0.36 = 15.67 (Moderate)
My Target Price	:	6.12+0.17 = 6.29 (PE 17, EPS 0.36, DPS 0.17)
My Decision	:	NOT BUY unless price below 5.6
My Comment	:	Revenue increased but profit decreased, lower liquidity ratio but still good, higher gearing ratio but still moderate level, shares increasing, CPO price increasing, monthly production droped on November, receivables collection period still good
Technical Support Price	:	5.5
Risk Rating	:	MODERATE
OSK Target Price	:	5.14 (19 Nov 10)

Latest Market Capital (Capital Size)	38,898,854,617 (Very Large)
Return on Equity	17.55%
Dividend Yield	2.93%
Profit Margin	17.07%
Tax Rate	24.83%
Asset Turnover	0.709
Net Asset Value Per Share	1.61
Net Tangible Asset per share	1.53
Price/Net Tangible Asset Per Share	3.86
Cash Per Share	0.12
Liquidity Current Ratio	3.5409
Liquidity Quick Ratio	2.7712
Liquidity Cash Ratio	0.3524
Gearing Debt to Equity Ratio	0.6862
Gearing Debt to Asset Ratio	0.4001
Average working capital per thousand Ringgit sale	43.0%
Average days to sell the inventory	57
Average days to collect the receivables	45

My notes based on 2011 quarter 1 report (number in '000):-
- The Group reported a 6% higher pre-tax profit than Q1 FY2010. The higher profit is due mainly to higher profit contribution from the plantation segment and higher unrealised translation gain on foreign currency denominated borrowings

- The plantation segment reported a 38% increase in operating profit for Q1 FY2011 as compared to Q1 FY2010. The higher profit is due mainly to higher CPO prices realised as well as a marginal increase in FFB production. Average CPO price realized for Q1 FY2011 is RM2,598/MT compared to RM2,294/MT for Q1 FY2010

- The property development and investment segment’s operating profit of RM160.3 million for Q1 FY2011 is in line with Q1 FY2010

- The resource-based manufacturing segment’s operating profit decreased from RM158.9 million in Q1 FY2010 to RM40.4 million in Q1 FY2011 due mainly to lower volume and margins and fair value losses on the adoption of FRS 139

- The Group reported a 7% higher pre-tax profit for Q1 FY2011 than the profit reported for Q4 FY2010

- The plantation segment reported a 26% increase in operating profit for Q1 FY2011 as compared to Q4 FY2010. The higher profit is due mainly to increase in FFB production as well as slight improvement in CPO prices realised. Total FFB production for Q1 FY2011 is 879,322MT compared to 754,589MT for Q4 FY2010

- Operating profit from the property segment for Q1 FY2011 is lower than the preceding quarter by 16% as the preceding quarter’s profit included fair value gains on investment properties of RM21.0 million and gain on disposal of a subsidiary of RM34.9 million. Excluding these gains, the property's segment's profit is 19% higher than the previous quarter due mainly to an increase in sales

- The resource-based manufacturing segment reported a profit of RM40.4 million in Q1 FY2011, 70% lower than Q4 FY2010 due mainly to lower volume and fair value losses on the adoption of FRS 139

- Estimate next 4Q eps after 2011 Q1 result announced = 0.09*4 = 0.36, estimate PE on current price 5.81 = 15.67(DPS 0.17)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.0828*4*1.05 = 0.3478, estimate highest/lowest PE = 16.79/14.32 (DPS 0.17)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0692*1.1*4 = 0.3045, estimate highest/lowest PE = 17.34/15.04 (DPS 0.09)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.0729*4 = 0.2916, estimate highest/lowest PE = 19.31/17.46 (DPS 0.09)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.0737*4 = 0.2948, estimate highest/lowest PE = 18.86/16.72 (DPS 0.07)

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