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Wednesday, February 9, 2011

KLCI Stock - ADVENTA / 7191 - 2010 Quarter 4

Company Info
Market Capital (Capital Size)386,547,998 (Small)
Par ValueRM 0.50

My Analysis
Forecast P/E now(2.53-0.07)/0.16 = 15.38 (High)
Target Price1.44+0.07 = 1.51 (PE 9.0, EPS 0.16, DPS 0.07)
DecisionNOT BUY unless USD currency strengthen and latex price decrease
Revenue is highest since FY09Q2, eps second consecutive quarter increasing and also higher than preceding year corresponding quarter, no free cash flow but got positive net cash flow, liquidity ratio decreasing to low level now, gearing ratio increasing to above moderate level now, working capital largely decreased, payables period increased
First Support Price2.3
Second Support Price1.9
Risk RatingHIGH

Research House
OSK Target Price3.8 (2010-12-23)
RHB Target Price2.21 (2010-12-23)
CIMB Target Price3.14 (2010-12-29)

Accounting Ratio
Return on Equity16.01%
Dividend Yield2.77%
Profit Margin4.64%
Tax Rate-
Asset Turnover0.8045
Net Asset Value Per Share1.5
Net Tangible Asset per share1.47
Price/Net Tangible Asset Per Share1.31
Cash Per Share0.28
Liquidity Current Ratio1.1286
Liquidity Quick Ratio0.7164
Liquidity Cash Ratio0.2678
Gearing Debt to Equity Ratio0.8723
Gearing Debt to Asset Ratio0.4649
Working capital per thousand Ringgit sale5.9%
Days to sell the inventory80
Days to collect the receivables76
Days to pay the payables74

My notes based on 2010 quarter 4 report (number in '000):-
- Revenue for the quarter at RM91 million is a 22% improvement over corresponding quarter last financial year. Operating profit dipped 31% from the high raw material cost and weak US dollar. The fast hike in rubber prices induced a large time-lag related delay in revenue increase even though cost are eventually passed into selling price. This drag down the quarter’s earnings. A new factory was completed in this period, adding capacity to the tight high utilization rate in some products

- The quarter’s revenue increased 4% and earnings fell 50% over preceding quarter. The increase in price of rubber latex plus weakening of US Dollar contributed to the lower earnings. Since more than 80% of the Group’s sales are in US Dollar, currency fluctuations increased the time-lag effect in any price increase exercise that the Group implemented

- Estimate next 4Q eps after 2010 Q4 result announced = 0.04*4 = 0.16, estimate PE on current price 2.44 = 11.34(DPS 0.07)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.055*4*0.95 = 0.209, estimate highest/lowest PE = 12.39/8.71 (DPS 0.07)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.0434*4 = 0.1736*1.1(QbQ improvement adjustment) = 0.191, estimate highest/lowest PE = 16.81/11.78 (DPS 0.07)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.063*4 = 0.252, estimate highest/lowest PE = 15.36/11.35 (DPS 0.07)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.0372*4 = 0.1488, estimate highest/lowest PE = 28.83/18.28 (DPS 0.06)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.0319*4 = 0.1276, estimate highest/lowest PE = 23.2/11.36 (DPS 0.06)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.0272*4 = 0.1088, estimate highest/lowest PE = 19.39/7.77 (DPS 0.06)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.0232*4 = 0.092, estimate highest/lowest PE = 13.04/8.26 (DPS 0.06)

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