KLCI Stock - AIRPORT / 5014 - 2011 Quarter 2

Company Info

Market Capital (Capital Size)	7,139,000,000 (Very Large)
Par Value	RM 1.00

My Analysis

Forecast P/E now	(6.49-0.1975)/0.298 = 21.12 (High)
Target Price	4.77+0.1975 = 4.97 (PE 16.0, EPS 0.298, DPS 0.1975)
Decision	Not interested unless profit increase more
Comment	Revenue increased 7.2% and is fourth consecutive quarter increasing (higher than preceding year corresponding quarter 24.6%), eps decreased 7% and is second consecutive quarter decreasing but still higher than preceding year corresponding quarter 37.5%, cash generated from operating enough for financing expenses but not for investing expenses, weaker liquidity ratio but still at high level now, higher gearing ratio at high level now, receivables and payables ratio also slightly high, KLIA2 target completed by April 2012
First Support Price	6.5
Second Support Price	6.35
Risk Rating	MODERATE

Research House

HLG Target Price	6.58 (2010-12-28)
Macquarie Target Price	7.5 (2011-01-14)
OSK Target Price	8.47 (2011-02-11)
TA Target Price	6.6 (2011-02-17)
RHB Target Price	7.67 (2011-03-07)
Kenanga Target Price	6.64 (2011-04-11)
HwangDBS Target Price	7.6 (2011-04-15)
MIDF Target Price	7.2 (2011-06-01)
Maybank Target Price	7.55 (2011-07-26)

Accounting Ratio

Return on Equity	9.88%
Dividend Yield	3.04%
Profit Margin	20.50%
Tax Rate	39.01%
Asset Turnover	0.3137
Net Asset Value Per Share	3.08
Net Tangible Asset per share	-0.48
Price/Net Tangible Asset Per Share	-13.52
Cash Per Share	1.0
Liquidity Current Ratio	3.3331
Liquidity Quick Ratio	3.2198
Liquidity Cash Ratio	1.8193
Gearing Debt to Equity Ratio	1.0747
Gearing Debt to Asset Ratio	0.5176
Working capital per thousand Ringgit sale	63.8%
Days to sell the inventory	27
Days to collect the receivables	140
Days to pay the payables	200

My notes based on 2011 quarter 2 report (number in '000):-
- The improved revenue was mainly attributed to the effects of adopting IC 12 which resulted in recognition of construction revenue in relation to the construction of Klia2 and expansion of Penang International Airport in the current quarter of RM182.0 million

- Stripping out the construction revenue, the consolidated revenue for the current quarter under review was higher than the same corresponding period in the previous year by 8.4% or RM36.4 million

- The improvement in revenue for current quarter under review was mainly contributed by a positive growth of 7.3% from airport operations, driven by an increase in non-aeronautical revenue of 14.9% which was mostly derived from the Group’s retail business

- Passenger movements for the current quarter under review were 6.8% higher than the corresponding period last year, in which the international and domestic passenger movements increased by 2.6%

- The Group’s airport operations revenue was, however, impacted by airline incentives accrued in financial period-to-date of RM60.0 million which will be given out to airlines in the current financial year, as compared to RM10.0 million incurred in the corresponding period in the previous year. The airline incentives were granted to eligible airlines under the Airlines Recovery Program (“ARP”) announced on 18 November 2009 and effective for a period of three years ending 31 December 2011

- Despite the lower total crop harvested as a result of the 1,721 hectares of land surrendered for the construction of Klia2, revenue from the agriculture segment increased due to the higher fresh fruit bunch price which had increased by RM258 per MT ( 2011: 39,316MT / RM751, 2010:42,136MT/ RM493 )

- Hotel revenue grew 12.0% or RM3.6 million due to higher revenue from food and beverage related services and rooms occupancy rate

- The favourable PBT variance was attributed to the positive growth in revenue. The adoption of IC 12 has no impact to the PBT in the current quarter and financial period-to-date under review as no mark-up was applied to the construction cost incurred in deriving the construction revenue
recognized

- In addition, the improvement in PBT was also as a result of lower interest on borrowings due to the settlement of short term borrowings at the end of 2010

- The favourable variance was also contributed by lower share of associate losses, as well as the MAHB Group’s cost saving initiatives resulting in lower utilities, repair maintenance and administrative expenses

- Estimate next 4Q eps after 2011 Q2 result announced = 0.0745*4 = 0.298, estimate PE on current price 6.49 = 21.12(DPS 0.1975)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.0801*4*1.1 = 0.3524, estimate highest/lowest PE = 18.57/17.26 (DPS 0.1975)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.0764*4*1.1 = 0.3362(deduct 16 million other income for adjustment), estimate highest/lowest PE = 20.64/17.31 (DPS 0.1975)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.06*4*1.1 = 0.264(associates increasing loss), estimate highest/lowest PE = 23.49/21.41 (DPS 0.149)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.3233*0.95 = 0.3071, estimate highest/lowest PE = 19.12/16.55 (DPS 0.229)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.3429*0.9 = 0.3086 (10% drop from 0.3429), estimate highest/lowest PE = 17.24/14.81 (DPS 0.229)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.086*4 = 0.344, estimate highest/lowest PE = 13.97/12.89 (DPS 0.233)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.0758*4 = 0.3032, estimate highest/lowest PE = 15.72/11.36 (DPS 0.233)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.068*4 = 0.272, estimate highest/lowest PE = 13.18/11.6 (DPS 0.1855)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.0695*4 = 0.278, estimate highest/lowest PE = 13.07/10.27 (DPS 0.1855)
- Estimate next 4Q eps after 2008 Q4 result announced = 0.069*4 = 0.276, estimate highest/lowest PE = 12.37/7.63 (DPS 0.1855)

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