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Saturday, February 12, 2011

KLCI Stock - F&N / 3689 - 2011 Quarter 1

Company Info
Market Capital (Capital Size)5,459,570,781 (Very Large)
Par ValueRM 1.00

My Analysis
Forecast P/E now(15.22-0.545)/0.8 = 18.34 (High)
Target Price12.80+0.545 = 13.34 (PE 16.0, EPS 0.8, DPS 0.545)
DecisionNOT BUY unless revenue and profit increase more
Revenue Increased, higher than preceding year corresponding period also but still lower than FY10Q2, eps Increased (after deduct non-repeatable gain), higher than preceding year corresponding quarter also but still lower than FY10Q2, Free cash flow and net cash flow both also increasing, better liquidity ratio, better gearing ratio, better working capital, prices of key raw materials increasing, involved into snack business
First Support Price15.0
Second Support Price14.42

Research House
AMMB Target Price17.2 (2011-01-13)
CIMB Target Price11.7 (2011-02-08)
Inter Pacific Target Price14.9 (2011-02-08)
Maybank Target Price15 (2011-02-08)
TA Target Price16 (2011-02-08)

Accounting Ratio
Return on Equity43.47%
Dividend Yield3.58%
Profit Margin13.23%
Tax Rate21.29%
Asset Turnover1.2692
Net Asset Value Per Share4.24
Net Tangible Asset per share3.9
Price/Net Tangible Asset Per Share3.84
Cash Per Share2.35
Liquidity Current Ratio1.5063
Liquidity Quick Ratio1.1009
Liquidity Cash Ratio0.6275
Gearing Debt to Equity Ratio1.0193
Gearing Debt to Asset Ratio0.5047
Working capital per thousand Ringgit sale17.5%
Days to sell the inventory57
Days to collect the receivables59
Days to pay the payables78

My notes based on 2011 quarter 1 report (number in '000):-
- Group revenue for the quarter crossed the billion Ringgit mark, representing an increase of 17% over the same period last year

- Soft drinks revenue growth accelerated by 25% on account of continued strong demand across all product categories, an earlier Chinese New Year sales window and incremental sales from new product variants. The Group had recently introduced several new fruity teas under SEASONS and juice drinks under Fruit Tree in PET bottle. Redbull energy drinks distribution, which had not started during the corresponding quarter last year, further added to the growth

- Dairies revenue grew 12% contributed mainly from broad-based volume growth in Thailand and Indochina. In Malaysia, condensed milk volume stagnated at the dairies plant with volume switching from export to meet domestic demand given the capacity constraint. Revenue improved on account of withdrawal of trade discount preceding an anticipated price increase driven by higher input cost

- Group operating profit was RM132 million or 35% above the same period last year. Soft drinks operating margin benefited from greater economies of scale on higher volume despite higher input costs. While the operating margin for dairies Thailand was maintained due to higher supply chain and manufacturing efficiency from the Rojana factory, operating margin for Malaysia came under pressure due to escalating raw materials costs, of which the reduction of sugar subsidy in Malaysia was a major factor

- Group profit after taxation for the quarter improved 46% to RM107 million on account of higher revenue and tax incentives enjoyed by the Dairies plant in Rojana, Thailand

- Group PBT of the continuing operations for the quarter of RM136 million was 41% higher than the preceding quarter on strong soft drinks and dairies operating performance, which more than made up for the absence of one-off gain from Property division recorded in the preceding quarter

- Estimate next 4Q eps after 2011 Q1 result announced = 0.2*4 = 0.8(around 5% ROE), estimate PE on current price 15.22 = 18.34(DPS 0.545)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.875*0.95 = 0.8313, estimate highest/lowest PE = 17.58/15.82 (DPS 1.645)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.8236(correction), estimate highest/lowest PE = 17.53/15.85 (DPS 0.465)
- Estimate next 4Q eps after 2010 Q2 result announced = 1.0072(10% grow from 0.4578*2), estimate highest/lowest PE = 14.43/10.18 (DPS 0.465)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.961(10% grow from 0.2184*4), estimate highest/lowest PE = 11.06/10.44 (DPS 0.47)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.8195, estimate highest/lowest PE = 13.58/12.04 (DPS 0.47)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.8, estimate highest/lowest PE = 12.79/11.29 (DPS 0.47)

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