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Thursday, March 24, 2011

KLCI Stock - UMW / 4588 - 2010 Quarter 4

Company Info
Market Capital (Capital Size)8,434,745,932 (Very Large)
Par ValueRM 0.50

My Analysis
Forecast P/E now(7.25-0.3)/0.4935 = 14.08 (Moderate)
Target Price7.40+0.3 = 7.70 (PE 15.0, EPS 0.4935, DPS 0.3)
DecisionBUY
Comment
Revenue increased 11.4% and also higher than preceding year corresponding quarter 14.9%, eps decreased 87.6% and is second consecutive quarter decreasing and also lower than preceding year coorresponding quarter 83.8%, both positive free and net cash flow increased, affecting by strengthening of JPY currency, oil & gas expect to profit in coming quarter, at least 50% profit for dividend
First Support Price7.1
Second Support Price7.0
Risk RatingMODERATE

Research House
BIMB Target Price8.11 (2011-01-13)
ECM Target Price8.16 (2011-02-25)
HwangDBS Target Price8.9 (2011-02-25)
AMMB Target Price7.4 (2011-03-17)
Maybank Target Price7.2 (2011-03-18)
OSK Target Price8.92 (2011-03-18)
RHB Target Price7.85 (2011-03-18)
TA Target Price6.72 (2011-03-18)

Accounting Ratio
Return on Equity9.74%
Dividend Yield4.14%
Profit Margin6.53%
Tax Rate44.82%
Asset Turnover1.2847
Net Asset Value Per Share3.52
Net Tangible Asset per share3.27
Price/Net Tangible Asset Per Share2.17
Cash Per Share1.9
Liquidity Current Ratio1.8053
Liquidity Quick Ratio1.2701
Liquidity Cash Ratio0.8339
Gearing Debt to Equity Ratio1.1777
Gearing Debt to Asset Ratio0.4736
Working capital per thousand Ringgit sale16.4%
Days to sell the inventory43
Days to collect the receivables32
Days to pay the payables50

My notes based on 2010 quarter 4 report (number in '000):-
- Group revenue of RM3438.1 million for the third quarter ended 31st December 2010 exceeded that of the preceding year's corresponding quarter of RM2992.3 million by RM445.8 million or 14.9%. Improved sales registered by all business segments of the Group resulted in the revenue growth

- Group profit before taxation for the fourth quarter ended 31st December 2010 of RM224.7 million was, however lower than the RM249.1 million registered in the same quarter of 2009 by 9.8%, a decrease of RM24.4 million. while improved automotive sales generated higher profits, impairment losses provided on some of our assets and investments resulted in the lower profit before taxation

- Consequently, net profit attributable to the owners of the Company for the fourth quarter of 2010 decreased from RM111.1 million registered in the same quarter of 2009 to RM18.5 million, a reduction of RM92.6 million or 83.3%

- Group revenue of RM12840.6 million for the financial year ended 31st December 2010 surpassed the RM10720.9 million recorded in the same period of 2009 by RM2119.7 million or 19.8%. Generally, strong economic recovery and improved consumer confidence resulted in high demand for our products and services in the Automotive, Equipment and Manufacturing & Engineering segments. However, demand for our oil and gas products and services continued to be adversely affected by the slower recovery in the Oil & Gas industry

- Group profit before taxation for the financial year ended 31st December 2010 0f RM1312.9 million improved over the RM846.5 million achieved in 2009 by 55.1%, an increase of RM466.4 million. Higher revenue from three of our four core business segments, improved margins from favourable foreign exchange rates and model mix contributed to the higher profit. However, the anti-dumping and countervailing duties imposed by the United States of America on Oil Country Tubular Goods ('OCTG') pipes imported from China continued to adversely affect the performance of our overseas associate, WSP Holdings Limited ('WSP'). In addition, pre-operating expenses incurred by our jack-up rigs, Naga 2 and Naga 3 also contributed to the loss registered by the Oil & Gas segment

- Net profit attributable to the owners of the Company of RM512.4 million for the financial year ended 31st December 2010 improved over the RM382.4 million achieved in the same period of 2009 by RM130 million or 34%

- Total Toyota and Perodua vehicles sales of 281958 units represented 46.6% of the Total Industry Volume ('TIV') of 605156 units reported by the Malaysian Automotive Association for the financial year ended 31st December 2010

- Group revenue of RM3438.1 million for the fourth quarter ended 31st Decemeber 2010 was higher than the RM3087.3 million registered in the third quarter of 2010 by RM350.8 million or 11.4%. Higher sales registered by all four core business segments contributed to the improved revenue

- However, Group profit before taxation of RM224.7 million for the fourth quarter ended 31st December 2010 was RM116.2 million or 34.1% lower than the RM340.9 million recorded in the third quarter of 2010. The reduction in profit was mainly due to provision for impairment loss on some of our assets and investments

- Estimate next 4Q eps after 2010 Q4 result announced = 0.4486*1.1 = 0.4935, estimate PE on current price 7.25 = 14.08(DPS 0.3)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.1311*4*0.9 = 0.472, estimate highest/lowest PE = 15.65/13.57 (DPS 0.335)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.1517*4*0.9 = 0.5461(0.1517 is average of recent 2Q eps, deduct 10% risk adjustment), estimate highest/lowest PE = 12.43/11.3 (DPS 0.24)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.1034*4 = 0.4136(0.1034 is average of recent 2Q eps), estimate highest/lowest PE = 15.11/14.24 (DPS 0.2)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.1016*4 = 0.4064(0.1016 is average of recent 2Q eps), estimate highest/lowest PE = 15.97/14.54 (DPS 0.2)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.0927*4 = 0.3708(0.0927 is average of recent 2Q eps), estimate highest/lowest PE = 16.94/15.29 (DPS 0.23)

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