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Tuesday, May 31, 2011

KLCI Stock - IRCB / 2127 - 2011 Quarter 4

Company Info
Market Capital (Capital Size)106,564,716 (Small)
Par ValueRM 0.20

My Analysis
Forecast P/E now0.18/0.0066 = 27.27 (High)
Target Price0.0066*6.0 = 0.04 (PE 6.0, EPS 0.0066)
DecisionNot interested unless revenue and profit increase more
Revenue increased 3% but lower than preceding year corresponding quarter 29.3%, eps decreased 224.5%(exclude RM37.74 million written down) and also lower than preceding year corresponding quarter 608.3%, no cash generated from operating but still got cash generated from right issue left, stronger liquidity ratio at low level now, lower gearing ratio at above moderate level now, all accounting periods are good, high latex price, USD dollar against Ringgit still weak
First Support Price0.18
Second Support Price0.13
Risk RatingHIGH

Accounting Ratio
Return on Equity-36.66%
Dividend Yield-
Profit Margin-126.19%
Tax Rate-
Asset Turnover0.7033
Net Asset Value Per Share0.17
Net Tangible Asset per share0.17
Price/Net Tangible Asset Per Share1.62
Cash Per Share0.11
Liquidity Current Ratio1.6256
Liquidity Quick Ratio1.1564
Liquidity Cash Ratio0.816
Gearing Debt to Equity Ratio0.9222
Gearing Debt to Asset Ratio0.4797
Working capital per thousand Ringgit sale35.7%
Days to sell the inventory76
Days to collect the receivables70
Days to pay the payables38

My notes based on 2011 quarter 4 report (number in '000):-
- The drop in revenue was mainly due to the modification of production lines in Factory 2 since the middle of 3rd quarter. The modification will give a higher level of flexibility to the production lines to switch among the production of powder, powder free natural rubber gloves and nitrile gloves

- The significant loss before taxation was mainly due to the written down of its goodwill of RM33.73 million. The Group feels it is prudent to write down the goodwill in the year under review as this does not have any negative impact on the cash flow or operation of the Group

- The high latex price and weakening US dollar have also affected the performance of the Group. Moreover, the stocks write-down of RM2.39 million and quality claims of RM1.62 million had an additional negative impact on the Group performance. However, these factors were deemed to be one-ff items

- No estimate next 4Q eps after 2011 Q4 result announced due to loss, if use eps from FY2010Q3 to FY2011Q2 = 0.0066, estimate PE on current price 0.18 = 27.27
- No estimate next 4Q eps after 2011 Q3 result announced due to exclude other income will be a loss, if use eps from FY2010Q2 to FY2011Q1 = 0.0079, estimate highest/lowest PE = 32.28/2
- Estimate next 4Q eps after 2011 Q2 result announced = 0.0021*2*1.05 = 0.0044(exclude gain from sale of land), estimate highest/lowest PE = 118.18/51.14
- Estimate next 4Q eps after 2011 Q1 result announced = 0.0079(remain recent last 4Q cumulative eps), estimate highest/lowest PE = 102.53/48.73
- Estimate next 4Q eps after 2010 Q4 result announced = 0.0022*4 = 0.0088, estimate highest/lowest PE = 128.41/67.61

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