KLCI Stock - KENCANA / 5122 - 2011 Quarter 1

Company Info

Market Capital (Capital Size)	4,550,492,298 (Large)
Par Value	RM 0.10

My Analysis

Forecast P/E now	(2.48-0.0050)/0.1239 = 19.98 (Moderate)
Target Price	2.60+0.0050 = 2.61 (PE 21.0, EPS 0.1239, DPS 0.0050)
Decision	BUY
Comment	Revenue increased and is highest since FY08Q3, eps second consecutive quarter increasing but still lower than preceding year corresponding quarter, neither got free nor positive net cash flow, liquidity ratio largely decreasing from low to weak level now, gearing ratio increasing at above moderate level now, payables period getting longer, oil price above $80
First Support Price	2.4
Second Support Price	2.15
Risk Rating	MODERATE

Research House

Maybank Target Price	3.1 (2011-01-06)
AMMB Target Price	3.4 (2011-01-12)
Affin Target Price	3.21 (2011-01-27)
CIMB Target Price	2.83 (2011-01-27)
OSK Target Price	3.05 (2011-01-31)
RHB Target Price	2.85 (2011-02-07)

Accounting Ratio

Return on Equity	21.21%
Dividend Yield	0.20%
Profit Margin	20.21%
Tax Rate	23.11%
Asset Turnover	0.7106
Net Asset Value Per Share	0.48
Net Tangible Asset per share	0.46
Price/Net Tangible Asset Per Share	4.76
Cash Per Share	0.14
Liquidity Current Ratio	0.7146
Liquidity Quick Ratio	0.6793
Liquidity Cash Ratio	0.3062
Gearing Debt to Equity Ratio	0.9951
Gearing Debt to Asset Ratio	0.4982
Working capital per thousand Ringgit sale	-18.3%
Days to sell the inventory	10
Days to collect the receivables	85
Days to pay the payables	171

My notes based on 2011 quarter 1 report (number in '000):-
- For the current quarter under review, the Group recorded revenue of RM337.0 million and profit before taxation of RM68.1 million. Compared to the corresponding quarter ended 31 October 2009 of RM281.0 million and RM41.8 million, revenue and profit before tax had increased by approximately 20% and 63% respectively in the current quarter. This is mainly due to progress achieved for contracts in hand and better management of relevant costs as well as maiden contribution from drilling services

- Profit before tax for the current quarter under review had gone up by 33% at RM68.1 million, as compared to the immediate preceding quarter of RM51.2 million. The increase in profit before tax for the current quarter was mainly due to better management of relevant costs

- Estimate next 4Q eps after 2010 Q1 result announced = 0.0563*2*1.1 = 0.1239, estimate PE on current price 2.48 = 19.98(DPS 0.005)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.0249*4*1.1 = 0.1096, estimate highest/lowest PE = 20.39/14.92 (DPS 0.005)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0191*4 = 0.0764, estimate highest/lowest PE = 22.19/18.26 (DPS 0.005)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.02*4 = 0.08, estimate highest/lowest PE = 20.94/15.69 (DPS 0.005)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.0339*4 = 0.1356, estimate highest/lowest PE = 18.47/9.92 (DPS 0.005)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.1307, estimate highest/lowest PE = 19.09/16.03 (DPS 0.005)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.0324*4 = 0.1296, estimate highest/lowest PE = 17.32/12.77 (DPS 0.005)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.0301*4 = 0.1204, estimate highest/lowest PE = 16.07/9.34 (DPS 0.005)

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