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Sunday, May 1, 2011

KLCI Stock - SIME / 4197 - 2011 Quarter 2

Company Info
Market Capital (Capital Size)54,205,363,755 (Very Large)
Par ValueRM 0.50

My Analysis
Forecast P/E now(9.02-0.11)/0.5098 = 17.48 (High)
Target Price8.16+0.11 = 8.27 (PE 16.0, EPS 0.5098, DPS 0.11)
DecisionNot interested unless CPO price uptrend
Revenue increased 17.1% and also higher than preceding year corresponding quarter 21.9%, eps increased 34.1% and is second consecutive quarter increasing and also higher than preceding year corresponding quarter 104.8%, cash generated from operating is more than enough to cover financing activities but still increased borrowing for investing activities, liquidity ratio increasing at low level now, gearing ratio increased at above moderate level now, all accounting periods are good, CPO price decreasing, potential of Biogas Projects & vegetable oil plant, Hub Development Project, Maersk Oil Qatar Project
First Support Price9
Second Support Price8.6

Research House
HwangDBS Target Price10.2 (2010-11-30)
ECM Target Price9.12 (2011-02-25)
OSK Target Price9.13 (2011-03-08)
CIMB Target Price10.9 (2011-03-24)
Maybank Target Price10.6 (2011-03-24)
MIDF Target Price11.86 (2011-03-24)
RHB Target Price10.6 (2011-03-24)
AMMB Target Price10.6 (2011-04-26)
HLG Target Price10.83 (2011-04-26)
TA Target Price11.16 (2011-04-26)

Accounting Ratio
Return on Equity4.95%
Dividend Yield1.22%
Profit Margin12.07%
Tax Rate25.63%
Asset Turnover0.894
Net Asset Value Per Share3.66
Net Tangible Asset per share3.65
Price/Net Tangible Asset Per Share2.47
Cash Per Share0.92
Liquidity Current Ratio1.6579
Liquidity Quick Ratio0.9815
Liquidity Cash Ratio0.4449
Gearing Debt to Equity Ratio0.7883
Gearing Debt to Asset Ratio0.4329
Working capital per thousand Ringgit sale22.7%
Days to sell the inventory90
Days to collect the receivables62
Days to pay the payables83

My notes based on 2011 quarter 2 report (number in '000):-
- Plantation posted a higher contribution by 5% primarily on account of the higher average crude palm oil (CPO) price realised of RM2,692 per tonne as compared to RM2,222 per tonne in the corresponding period, which compensated the impact of the lower production of fresh fruit bunches (FFB) and oil extraction rate (OER) coupled with the lower contribution from downstream operations

- The Group’s FFB production declined by 7% to 5.17 million tonnes as production in Malaysia and Indonesia fell by 10% to 3.27 million tonnes and 1% to 1.90 million tonnes, respectively. The lower production was due to exceptionally high rainfall and changing cropping pattern. The Group’s OER dropped to 21.4% as compared to 22.0% in the corresponding period

- The downstream operations reported lower profits by 31% mainly due to the lower refinery margin as a result of higher feedstock cost and the tightening of the price spread between CPO and refined products

- Profit from Property declined by 26% mainly because of the lower contribution from an associate involved in asset management and the inclusion of a gain on disposal of a subsidiary of RM37.5 million in the corresponding period

- Industrial registered a 21% jump in profit due primarily to the higher demand for heavy equipment in Australia, Malaysia and China

- Motors continued its sterling performance, recording a hike in profit of 87% compare to preceding year corresponding quarter, riding on the back of the buoyant demand from all regions except Singapore

- Energy & Utilities recorded a profit as compared to a loss in the corresponding period primarily due to the loss incurred previously of RM201.5 million in the Oil & Gas sector. The Power and Port sectors contributed higher returns due mainly to high turnover in its Thailand power plant and commencement of new port operations in China

- Profit in Healthcare was maintained. However a loss of RM6.3 million is registered in Others due to the impairment provision of RM24.3 million on an investment

- Motors’s performance for the current quarter was lower by 17% compared to preceding quarter due to the loss incurred by Australia and the lower profits posted by New Zealand and Hong Kong

- Estimate next 4Q eps after 2011 Q2 result announced = (0.146+0.1089)*2 = 0.5098(cpo price decreasing but offset by contracts awarded), estimate PE on current price 9.02 = 17.48(DPS 0.11)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.1271*4*1.1 = 0.5592(ROE 3.5% per quarter with condition CPO price continue maintain high), estimate highest/lowest PE = 16.79/15.22 (DPS 0.1)
- No estimate next 4Q eps after 2010 Q4 result announced
- No estimate next 4Q eps after 2010 Q3 result announced
- Estimate next 4Q eps after 2010 Q2 result announced = 0.37, estimate highest/lowest PE = 22.22/19.59 (DPS 0.22)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.34, estimate highest/lowest PE = 26.44/23.76(DPS 0.2)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.37, estimate highest/lowest PE = 24.43/21.59 (DPS 0.2)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.34, estimate highest/lowest PE = 24.35/18.91 (DPS 0.27)

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