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Friday, May 27, 2011

KLCI Stock - PPB / 4065 - 2011 Quarter 1

Company Info
Market Capital (Capital Size)20,864,797,923 (Very Large)
Par ValueRM 1.00

My Analysis
Forecast P/E now(17.6-0.18)/0.8501 = 20.49 (High)
Target Price13.60+0.18 = 13.78 (PE 16.0, EPS 0.8501, DPS 0.18)
DecisionNot interested unless revenue and profit increase more
Revenue decreased 5.7% but higher than preceding year corresponding quarter 15.1%, eps increased 73.7% but lower than preceding year corresponding quarter 7.6%, no cash generated from operating but cash generated from financing is more than enough to cover all expenses, stronger liquidity ratio at very strong level now, better gearing ratio at very low level now, all accounting periods are good, wheat price increasing, expanding flour business
First Support Price16.4
Second Support Price16.0

Research House
HwangDBS Target Price15 (2011-03-04)
WILSON & YORK Target Price20.28 (2011-04-20)

Accounting Ratio
Return on Equity7.42%
Dividend Yield5.00%
Profit Margin48.89%
Tax Rate3.68%
Asset Turnover0.1634
Net Asset Value Per Share11.42
Net Tangible Asset per share11.35
Price/Net Tangible Asset Per Share1.53
Cash Per Share0.99
Liquidity Current Ratio6.3678
Liquidity Quick Ratio4.9504
Liquidity Cash Ratio3.6542
Gearing Debt to Equity Ratio0.0315
Gearing Debt to Asset Ratio0.0297
Working capital per thousand Ringgit sale73.4%
Days to sell the inventory79
Days to collect the receivables62
Days to pay the payables44

My notes based on 2011 quarter 1 report (number in '000):-
- Group revenue of RM580 million for the first quarter ended 31 March 2011 was 15% higher than the RM504 million for last year. The increase was due mainly to higher flour revenue and increased grains trading volume recorded by the grains trading, flour and feed milling divisions. The environmental engineering, chemicals trading and manufacturing division as well as the livestock farming division also contributed higher revenue for the quarter under review

- Group profit before tax declined by 6% to RM283 million compared with the corresponding period in 2010. The grains trading, flour and feed milling division contributed higher profits due to higher sales. Livestock farming registered a profit compared with a loss previously. However, profit contribution for the quarter from our associate Wilmar International Limited ("Wilmar") decreased by RM32 million due mainly to changes in fair value of embedded derivatives in convertible bonds

- Group profit before tax improved by 60% to RM283 million for the quarter under review compared with RM177 million in the preceding quarter. Although the grains trading, flour and feed milling division registered lower profits due to higher raw material costs, this was offset by a higher profit contribution from Wilmar

- Estimate next 4Q eps after 2011 Q1 result announced = 0.2237*4*0.95 = 0.8501, estimate PE on current price 17.6 = 20.49(DPS 0.18)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.2429*4*1.05 = 1.0202, estimate highest/lowest PE = 18.25/15.57 (DPS 0.18)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.268*4*1.1 = 1.1792, estimate highest/lowest PE = 14.73/12.56 (DPS 0.23)
- Estimate next 4Q eps after 2010 Q1 result announced = 1.2268+0.0127 = 1.2395 (adjustment from 0.242-0.2293, 0.242 represent eps excluded disposal of assets), estimate highest/lowest PE = 13.61/11.54 (DPS 0.73)
- Estimate next 4Q eps after 2009 Q4 result announced = 1.2268 (10% drop from 1.3631), estimate highest/lowest PE = 14.4/12.48 (DPS 0.73)
- Estimate next 4Q eps after 2009 Q3 result announced = 1.2357, estimate highest/lowest PE = 13.15/11.79 (DPS 0.73)
- Estimate next 4Q eps after 2009 Q2 result announced = 1.2152, estimate highest/lowest PE = 13.13/12.22 (DPS 0.23)
- Estimate next 4Q eps after 2009 Q1 result announced = 1.0309, estimate highest/lowest PE = 14.7/9.96 (DPS 0.23)

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