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Tuesday, May 31, 2011

KLCI Stock - HAIO / 7668 - 2011 Quarter 3

Company Info
Market Capital (Capital Size)440,774,814 (Small)
Par ValueRM 0.50

My Analysis
Forecast P/E now(2.18-0.04)/0.1336 = 16.02 (High)
Target Price1.07+0.04 = 1.11 (PE 8.0, EPS 0.1336, DPS 0.04)
DecisionNot interested unless revenue and profit increase more
Revenue increased 9.5% but lower than preceding year corresponding quarter 56.1%, eps increased 3.6% but lower than preceding year corresponding quarter 64.7%, cash generated from operating is not enough to cover dividend, weaker liquidity ratio but still at high level now, higher gearing ratio but still at low level now, all accounting periods are good, except manufacture division, all division higher revenue
First Support Price2.07
Second Support Price1.8
Risk RatingHIGH

Research House
OSK Target Price1.93 (2011-03-24)
RHB Target Price1.35 (2011-03-24)

Accounting Ratio
Return on Equity16.46%
Dividend Yield7.57%
Profit Margin15.66%
Tax Rate25.80%
Asset Turnover1.015
Net Asset Value Per Share0.99
Net Tangible Asset per share0.99
Price/Net Tangible Asset Per Share2.29
Cash Per Share0.4
Liquidity Current Ratio3.3676
Liquidity Quick Ratio2.3458
Liquidity Cash Ratio1.8158
Gearing Debt to Equity Ratio0.2807
Gearing Debt to Asset Ratio0.2125
Working capital per thousand Ringgit sale39.4%
Days to sell the inventory73
Days to collect the receivables32
Days to pay the payables49
My notes based on 2011 quarter 3 report (number in '000):-
- The drop in revenue and profit was mainly due to lower contribution by its principal subsidiary, the multi-level marketing(“MLM”) division

- However, the retail division had registered higher revenue, increase by about 37% and pre-tax profit increase by almost 85% due to strong festive sale during the Chinese Lunar New Year, as compared to last year, which fell in the fourth quarter of the last financial year. Whereas the higher external revenue generated from the wholesale division has been offset by the lower inter-segment sales from the MLM division, which had resulted in lower pre-tax profit

- Higher revenue mainly due to higher contribution from the retail division and the recovery of MLM division‟s sales. The MLM division has been stepping up its efforts in product training programs and promotional activities which has helped the division to pull up its sales

- Nevertheless, due to the higher personnel and operating costs during the festive season incurred in the third quarter, the pre-tax profit did not improve much as compared with the immediate preceding quarter despite higher revenue achieved

- Estimate next 4Q eps after 2011 Q3 result announced = 0.0318*4*1.05 = 0.1336, estimate PE on current price 2.62 = 16.02(DPS 0.1)
- Estimate next 4Q eps after 2011 Q2 result announced = 0.0307*4*0.95 = 0.1167, estimate highest/lowest PE = 23.91/18.25 (DPS 0.1)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.0391*4 = 0.1564, estimate highest/lowest PE = 20.01/17.46 (DPS 0.12)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.0714*4 = 0.2856*1.1(10% QbQ improvement adjustment) = 0.3142, estimate highest/lowest PE = 12.16/8.78 (DPS 0.2)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.3729, estimate highest/lowest PE = 12.42/9.17 (DPS 0.18)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.2424*4 = 0.9696, estimate highest/lowest PE = 10.78/7.44(DPS 0.42)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.2217*4 = 0.8868, estimate highest/lowest PE = 8.54/6.33 (DPS 0.42)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.1778*4 = 0.7112, estimate highest/lowest PE = 7.44/5.76 (DPS 0.4)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.1463*4 = 0.5852, estimate highest/lowest PE = 6.9/5.06 (DPS 0.4)

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