KLCI Stock - DIALOG / 7277 - 2011 Quarter 2

Company Info

Market Capital (Capital Size)	4,963,176,895 (Large)
Par Value	RM 0.10

My Analysis

Forecast P/E now	(2.49-0.031)/0.0691 = 35.59 (High)
Target Price	1.11+0.031 = 1.14 (PE 16.0, EPS 0.0691, DPS 0.031)
Decision	Not interested unless revenue and profit increase more
Comment	Revenue increased 1.8% but lower than preceding year corresponding quarter 2.6%, eps increased 8.3% and is second consecutive quarter increasing but still lower than preceding year corresponding quarter 10.7%, cash generated from operating is more than enough to cover all expenses, liquidity ratio decreasing at low level now, gearing ratio increased at above moderate level now, all accounting period are acceptable, Pengerang project, acquired New Zealand largest heavy fabrication company, O&G price increasing
First Support Price	1.75
Second Support Price	1.5
Risk Rating	HIGH

Research House

CIMB Target Price	2.2 (2010-12-21)
MIMB Target Price	2.15 (2010-12-27)
RHB Target Price	2.11 (2011-01-03)
AMMB Target Price	2.49 (2011-01-12)
Maybank Target Price	2.6 (2011-02-17)
MIDF Target Price	2.24 (2011-02-17)
OSK Target Price	2.51 (2011-02-17)

Accounting Ratio

Return on Equity	24.25%
Dividend Yield	1.24%
Profit Margin	17.50%
Tax Rate	19.66%
Asset Turnover	1.1738
Net Asset Value Per Share	0.26
Net Tangible Asset per share	0.26
Price/Net Tangible Asset Per Share	8.19
Cash Per Share	0.14
Liquidity Current Ratio	1.764
Liquidity Quick Ratio	1.6219
Liquidity Cash Ratio	0.8108
Gearing Debt to Equity Ratio	0.7229
Gearing Debt to Asset Ratio	0.4024
Working capital per thousand Ringgit sale	24.3%
Days to sell the inventory	19
Days to collect the receivables	92
Days to pay the payables	104

My notes based on 2011 quarter 2 report (number in '000):-
- The Group’s profit after taxation for the current financial quarter of RM37.7 million was 25% higher when compared to the corresponding quarter last year despite the slight 3% drop in revenue. The better result was due to higher contribution from Engineering & Construction and Plant Maintenance activities in Malaysia and Singapore. The Specialist Products and Services for International operation also performed better in the current financial quarter

- In addition, the commencement of operation by Langsat Terminal (One) Sdn Bhd in Tanjung Langsat, Johor in September 2009 for its Phase 1 and in April 2010 for its Phase 2, had also contributed positively to the Group’s financial results in the current quarter

- Profit before tax recorded for the current financial quarter of RM47.0 million was higher by 13% compared to RM41.5 million recorded in the preceding financial quarter. This was due to higher contribution from Engineering & Construction activities in Malaysia and Singapore, and Specialist Products and Services for International operation

- Estimate next 4Q eps after 2011 Q2 result announced = (0.0183+0.0146)*2*1.05 = 0.0691, estimate PE on current price 2.49 = 35.59(DPS 0.031)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.0169*4*1.05 = 0.071(ROE 6% per quarter), estimate highest/lowest PE = 31.82/19.14 (DPS 0.031)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.0146*4*1.05 = 0.0613, estimate highest/lowest PE = 23.8/16.95 (DPS 0.031)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0162*4*1.05 = 0.068(5% increase), estimate highest/lowest PE = 15.93/14.16 (DPS 0.037)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.04*2 = 0.08, estimate highest/lowest PE = 14.3/11.5 (DPS 0.036)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.0193*4 = 0.0772, estimate highest/lowest PE = 18.83/15.73 (DPS 0.036)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.0659*1.1 = 0.0725, estimate highest/lowest PE = 18.4/15.64 (DPS 0.036)

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