KLCI Stock - P&O / 6009 - 2011 Quarter 2

Company Info

Market Capital (Capital Size)	193,033,070 (Small)
Par Value	RM 0.50

My Analysis

Forecast P/E now	(0.785-0.0060)/0.1325 = 5.88 (Moderate)
Target Price	1.06+0.0060 = 1.07 (PE 8.0, EPS 0.1325, DPS 0.0060)
Decision	BUY
Comment	Revenue increased 34.2% and also higher than preceding year corresponding quarter 14.2%, eps decreased 7.1% and is second consecutive quarter decreasing but still higher than preceding year corresponding quarter 23.1%, no cash generated and largely over spent in operating activities but cash generated from financing enough to cover all expenses, stronger liquidity ratio at strong level now, better gearing ratio, higher reinsurance assets which should turn into higher revenue, insurance division profit decreasing but PAT still above RM9 million which equals to eps around 0.04
First Support Price	0.75
Second Support Price	0.71
Risk Rating	MODERATE

Accounting Ratio

Return on Equity	22.62%
Dividend Yield	0.76%
Profit Margin	8.32%
Tax Rate	29.39%
Asset Turnover	0.4826
Net Asset Value Per Share	0.83
Net Tangible Asset per share	0.81
Price/Net Tangible Asset Per Share	0.98
Cash Per Share	2.51
Liquidity Current Ratio	5.9137
Liquidity Quick Ratio	4.7989
Liquidity Cash Ratio	4.078
Gearing Debt to Equity Ratio	4.1004
Gearing Debt to Asset Ratio	0.8039
Working capital per thousand Ringgit sale	149.6%
Days to sell the inventory	144
Days to collect the receivables	80
Days to pay the payables	38

My notes based on 2011 quarter 2 report (number in '000):-
- Higher revenue mainly attributable to higher gross premium recorded by the insurance subsidiary and higher pbt mainly attributable to lower net claims incurred at the insurance subsidiary

- Estimate next 4Q eps after 2011 Q2 result announced = 0.0368*4*0.9 = 0.1325, estimate PE on current price 0.785 = 5.88(DPS 0.006)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.0277*4 = 0.1108(ROE 3.5% per quarter), estimate highest/lowest PE = 8.66/6.35 (DPS 0.006)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.05*4/2 = 0.1(ROE 3.5% per quarter), estimate highest/lowest PE = 9.6/7.7

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