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Friday, June 3, 2011

KLCI Stock - F&N / 3689 - 2011 Quarter 2

Company Info
Market Capital (Capital Size)6,930,905,119 (Very Large)
Par ValueRM 1.00

My Analysis
Forecast P/E now(19.32-0.58)/1.2 = 15.62 (Moderate)
Target Price19.20+0.58 = 19.78 (PE 16.0, EPS 1.2, DPS 0.58)
DecisionNot interested unless revenue and profit increase more
Revenue decreased 1.8% but higher than preceding year corresponding period 15.8%, eps increased 22.9% and also higher than preceding year corresponding quarter 52.8%, cash generated from operating is not enough to cover dividend and investing activities, stronger liquidity ratio at low level now, lower gearing ratio at moderate level now, lower working capital, all accounting periods are good, affecting by sugar price increasing
First Support Price18.8
Second Support Price16.6

Research House
AMMB Target Price22.7 (2011-05-06)
Maybank Target Price15.25 (2011-05-09)
MIDF Target Price18.75 (2011-05-09)
TA Target Price18.91 (2011-05-09)

Accounting Ratio
Return on Equity46.35%
Dividend Yield3.00%
Profit Margin16.01%
Tax Rate18.31%
Asset Turnover1.523
Net Asset Value Per Share4.2
Net Tangible Asset per share3.85
Price/Net Tangible Asset Per Share4.78
Cash Per Share1.42
Liquidity Current Ratio1.7629
Liquidity Quick Ratio1.312
Liquidity Cash Ratio0.599
Gearing Debt to Equity Ratio0.6998
Gearing Debt to Asset Ratio0.4116
Working capital per thousand Ringgit sale16.6%
Days to sell the inventory41
Days to collect the receivables52
Days to pay the payables68

My notes based on 2011 quarter 2 report (number in '000):-
- High revenue from sale of the college building under the Fraser Business Park (FBP) development project which contributed revenue of RM60 million to the group

- Soft drink division registered revenue growth of 19% compared with last year on account of successful festive promotions and incremental sales from new teas, juice product variants and Redbull energy drinks

- Revenue of the dairies division was flat. Improved sales in Thailand and Indochina were offset by lower volume in Malaysia as the market adjusted to the price increase implemented in January 2011 to pass on cost increase caused by the selective removal of sugar subsidies

- Dairies Thailand’s operating margin improved on the back of higher volume and manufacturing and supply chain efficiencies from the Rojana factory in Thailand

- Lower group tax charge as part of the gain on disposal of Brampton was not taxable

- Soft drinks and Dairies Thailand recorded revenue growths of 22% and 13% respectively while Dairies Malaysia registered no growth in revenue as volume declined on higher selling price

- Dairies Malaysia only managed to pass on, partially, the sharp increase in input costs as it made progressive adjustment to selling prices. Dairies Thailand recorded modest improvement in profit as it continued its drive to invest and strengthen its distribution network and brand equity both in Thailand and Indochina

- Soft drinks division registered lower PBT due to lower sales volume in February and March post major festive promotions. In the case of dairies division, PBT from Malaysian unit declined due to erosion of margin as a result of higher sugar price and market adjustment in volume due to the price increase

- Estimate next 4Q eps after 2011 Q2 result announced = 0.3*4 = 1.2(exclude RM53 million from sale of property income), estimate PE on current price 19.32 = 15.62(DPS 0.58)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.2*4 = 0.8(around 5% ROE), estimate highest/lowest PE = 22.09/18.07 (DPS 0.545)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.875*0.95 = 0.8313, estimate highest/lowest PE = 17.58/15.82 (DPS 1.645)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.8236(correction), estimate highest/lowest PE = 17.53/15.85 (DPS 0.465)
- Estimate next 4Q eps after 2010 Q2 result announced = 1.0072(10% grow from 0.4578*2), estimate highest/lowest PE = 14.43/10.18 (DPS 0.465)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.961(10% grow from 0.2184*4), estimate highest/lowest PE = 11.06/10.44 (DPS 0.47)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.8195, estimate highest/lowest PE = 13.58/12.04 (DPS 0.47)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.8, estimate highest/lowest PE = 12.79/11.29 (DPS 0.47)

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