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Thursday, December 23, 2010

KLCI Stock - NOTION / 0083 - 2010 Quarter 4

Company Info
Market Capital (Capital Size)258,117,501 (Small)
Par ValueRM 0.50

My Analysis
Forecast P/E now(1.67-0.045)/0.2092 = 7.77 (Moderate)
Target Price1.67+0.045 = 1.72 (PE 8.0, EPS 0.2092, DPS 0.045)
DecisionNOT BUY unless price below 1.6
Revenue decreased, also lower than preceding year corresponding quarter, profit increased but lower than preceding year corresponding quarter, cash from profit before taxation not enough to repay the expenses but still strong cash, liquidity decreasing at around moderate level, gearing ratio increasing at moderate level, working capital per sales decreasing, payables period increasing, USD against MYR slowly strengthening
First Support Price1.6
Second Support Price1.5
Risk RatingHIGH

Research House
osk Target Price1.45 (2010-12-16)

Accounting Ratio
Return on Equity16.00%
Dividend Yield2.69%
Profit Margin12.65%
Tax Rate-
Asset Turnover0.5883
Net Asset Value Per Share1.55
Net Tangible Asset per share1.55
Price/Net Tangible Asset Per Share1.05
Cash Per Share0.24
Liquidity Current Ratio1.9132
Liquidity Quick Ratio1.4167
Liquidity Cash Ratio0.5281
Gearing Debt to Equity Ratio0.6512
Gearing Debt to Asset Ratio0.3932
Working capital per thousand Ringgit sale28.2%
Days to sell the inventory68
Days to collect the receivables100
Days to pay the payables86

My notes based on 2010 quarter 4 report (number in '000):-
- The Group recorded revenue and profit after taxation ("PAT") of approximately RM53.0 million and RM8.2 million respectively for the quarter ended 30 September 2010. Refer Notes B2. and B3.
below for a detailed review of the Group's performance

- For 4Q of FY2010 the Group recorded revenue of RM53.0 million (3QFY2010 : RM60.8 million) and PAT of RM8.2 million (3QFY2010 : RM3.1 million) and earnings per share of 5.23 sen
(3QFY2010 : 1.92 sen). The lower revenue is mainly attributable to decrease in sales from HDD segment and the lower USD foreign exchange rate versus the Malaysian Ringgit. The
improvement in PAT of about RM5.1 million is mainly attributable to lower R&D cost, improved material yield, less incidence of rework and quality issue, foreign exchange gain from hedging
contracts and reinvestment allowances resulting in lower taxation

- The Group recorded an increase of 68.7% PBT as compared to the immediate preceding quarter

- For the current year todate, total revenue was RM226.8 million and PAT was RM37.5 million compared to the corresponding period of the preceding year of RM172.7 million and RM35.9 million
respectively. Yoy the revenue and profit after tax was 31.3% and 4% higher respectively

- In Q4FY2010, HDD parts revenue recorded RM18.3 million (Q3FY2010: RM27.9 million), camera parts recorded RM25.6 million (Q3FY2010: RM23.3 million) whilst the industrial/automotive
revenue was at RM9.1 million (Q3FY2010: RM9.6 million). The product mix for Q4FY2010 was HDD:Camera:Industrial/Automotive of 35%:48%:17% compared to previous quarter's mix of

- Estimate next 4Q eps after 2010 Q4 result announced = 0.0523*4*0.9 = 0.1883, estimate PE on current price 1.63 = 8.42(DPS 0.045)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0192*3+0.0806 = 0.1382(It may take 3Q to apply corrective measures to control costs, minimise rejects and maximise its production capacity), estimate highest/lowest PE = 15.16/10.67 (DPS 0.025)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.3788 (0.1804*2 = 0.3608, 5% grow from 0.3608), estimate highest/lowest PE = 8.65/5.24 (DPS 0.025)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.3674, estimate highest/lowest PE = 9.44/7.57 (DPS 0.03)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.0185*4 = 0.074, estimate highest/lowest PE = 11.62/9.95 (DPS 0.03)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.0158*4 = 0.0632, estimate highest/lowest PE = 8.39/5.49 (DPS 0.01)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.0065*4 = 0.026, estimate highest/lowest PE = 13.46/9.23 (DPS 0.01)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.0103*4 = 0.0412, estimate highest/lowest PE = 6.8/3.64 (DPS 0.01)

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