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Wednesday, April 13, 2011

KLCI Stock - HUAAN / 2739 - 2010 Quarter 4

Company Info
Market Capital (Capital Size)415,253,892 (Small)
Par ValueRM 0.50

My Analysis
Forecast P/E now(0.37-0.00178)/0.0113 = 32.59 (High)
Target Price0.09+0.00178 = 0.09 (PE 8.0, EPS 0.0113, DPS 0.00178)
DecisionNOT BUY
Revenue increased 12.4% and is second consecutive quarter increasing and also higher than preceding year corresponding quarter 15%, eps increased 200% and also recover from loss over preceding year corresponding quarter, cash generated from operating is enough to cover payables and investing activities, liquidity ratio decreased from moderate to low level now, gearing ratio increased from low to below moderate level now, all accounting periods are good
First Support Price0.33
Second Support Price0.32
Risk RatingHIGH

Research House
OSK Target Price0.41 (2010-12-01)
RHB Target Price0.33 (2010-12-27)

Accounting Ratio
Return on Equity0.92%
Dividend Yield0.48%
Profit Margin0.83%
Tax Rate-
Asset Turnover1.6817
Net Asset Value Per Share0.62
Net Tangible Asset per share0.52
Price/Net Tangible Asset Per Share0.65
Cash Per Share0.02
Liquidity Current Ratio1.9928
Liquidity Quick Ratio1.0525
Liquidity Cash Ratio0.1585
Gearing Debt to Equity Ratio0.2019
Gearing Debt to Asset Ratio0.168
Working capital per thousand Ringgit sale9.9%
Days to sell the inventory34
Days to collect the receivables29
Days to pay the payables37

My notes based on 2010 quarter 4 report (number in '000):-
- Higher revenue was primarily attributable to the favourable upward trend experienced in the pricing of the metallurgical coke and an increase in sales volume

- The average price of metallurgical coke saw an improvement of approximately 16% whilst sales volume grew by approximately 5% respectively during the current quarter compared with those in the preceding year corresponding quarter

- The average prices of ammonium sulphate, crude benzene, tar oil, coal slime and middlings during the current quarter under review have increased by approximately 37%, 16%, 32%, 34% and 33% respectively compared to the same quarter last year

- Following the increase in sales volume and an increase in the average price of raw material (i.e. coking coal) of approximately 21%, the cost of sales for the current quarter under review had risen to RM362.1 million compared to RM318.6 million recorded in the preceding year corresponding quarter, representing a hike of approximately 14%

- As a result of the better average prices of the metallurgical coke and its by-products and the growing sales volume, the Group has managed to turn around and record a gross profit

- The improvement in revenue was primarily attributed to the favourable average pricing of the metallurgical coke and of its by-products in comparison with those prices registered in the preceding quarter. The average prices for metallurgical coke, ammonium sulphate, crude benzene, tar oil, coal slimes and middlings during the current quarter under review were increased by 10%, 29%, 5%, 8%, 31% and 19% respectively

- Cost of sales in the current quarter has correspondingly increased in the preceding quarter ended 30 September 2010, an increase of approximately 14%. This was due to the average coking coal price during the quarter under review being 13% higher than that of the preceding quarter

- As a result of the gradually improving industry circumstances stemming from better average prices for the metallurgical coke and the by-products, the Group recorded a profit for the current quarter of approximately RM3.0 million, signifying its continued profitable streak for the third consecutive quarters since the earlier quarter ended 30 June 2010

- Estimate next 4Q eps after 2010 Q4 result announced = 0.0027*4*1.05 = 0.0113, estimate PE on current price 0.37 = 32.59
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0052*2 = 0.0104, estimate highest/lowest PE = 39.42/31.73

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