KLCI Stock - FAVCO / 7229 - 2011 Quarter 1

Company Info

Market Capital (Capital Size)	252,602,408 (Small)
Par Value	RM 0.50

My Analysis

Forecast P/E now	(1.42-0.05)/0.0955 = 14.35 (High)
Target Price	0.76+0.05 = 0.81 (PE 8.0, EPS 0.0955, DPS 0.05)
Decision	Not interested unless profit from core business increase more
Comment	Revenue decreased 15.1% and is second consecutive quarter decreasing but still higher than preceding year corresponding quarter 13.7%, eps decreased 61.8%(preceding quarter got high other income) but higher than preceding year corresponding quarter 11.3%, cash generated from operating is more than enough to cover all expenses, weaker liquidity ratio at low level now, higher gearing ratio at very high level now, all accounting periods also quite long time
First Support Price	1.12
Second Support Price	1.0
Risk Rating	HIGH

Accounting Ratio

Return on Equity	15.39%
Dividend Yield	3.52%
Profit Margin	4.91%
Tax Rate	7.55%
Asset Turnover	0.6369
Net Asset Value Per Share	1.13
Net Tangible Asset per share	1.08
Price/Net Tangible Asset Per Share	1.31
Cash Per Share	0.58
Liquidity Current Ratio	1.2338
Liquidity Quick Ratio	0.6659
Liquidity Cash Ratio	0.2526
Gearing Debt to Equity Ratio	2.0907
Gearing Debt to Asset Ratio	0.6765
Working capital per thousand Ringgit sale	24.1%
Days to sell the inventory	235
Days to collect the receivables	237
Days to pay the payables	168

My notes based on 2011 quarter 1 report (number in '000):-
- As at 19 May 2011, outstanding order book of the Group is RM496.4 million of which majority is from oil and gas cranes for the offshore oil and gas exploration and production activities. Remaining are from the shipyard, construction and wind turbine industry

- Estimate next 4Q eps after 2011 Q1 result announced = 0.0217*4*1.1 = 0.0955(lower down estimate due to previous high profit was from other income), estimate PE on current price 1.42 = 14.35(DPS 0.05)
- Estimate next 4Q eps after 2011 Q3 result announced = 0.1362, estimate highest/lowest PE = 10.5/7.05 (DPS 0.04)
- Estimate next 4Q eps after 2011 Q2 result announced = 0.1602*0.85 = 0.1362(450 million equal to 15% decrease from 2009 Q4 cum_eps), estimate highest/lowest PE = 8.37/5.58 (DPS 0.04)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.1442*0.7 = 0.1009 (30% drop from 0.1442, revenue drop and margin expect will not increase much), estimate highest/lowest PE = 8.42/7.04 (DPS 0.04)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.1442(10% drop from 0.1602, revenue drop and margin expect will not increase much), estimate highest/lowest PE = 6.93/4.92 (DPS 0.04)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.1442, estimate highest/lowest PE = 5.76/4.99 (DPS 0.025)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.1442, estimate highest/lowest PE = 6.45/5.49 (DPS 0.025)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.1442, estimate highest/lowest PE = 8.11/5.72 (DPS 0.025)

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