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Monday, August 15, 2011

KLCI Stock - F&N / 3689 - 2011 Quarter 3

Company Info
Market Capital (Capital Size)6,486,263,298 (Very Large)
Par ValueRM 1.00

My Analysis
Forecast P/E now(18.08-0.41)/0.7211 = 24.50 (High)
Target Price11.54+0.41 = 11.95 (PE 16.0, EPS 0.7211, DPS 0.41)
DecisionNot interested unless revenue and profit increase more
Revenue decreased 12.6% and was second consecutive quarter decreasing and also lower than preceding year corresponding period 1.2%, eps decreased 41.2% but higher than preceding year corresponding quarter 9.7%, cash generated from operating not enough to cover dividend nor investing activities hence spent 40% of Group cash, weaker liquidity ratio at low level now, higher gearing ratio at moderate level now, lower working capital, all accounting ratio are good, affecting by sugar price increasing and Coca-Cola business cease on October
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)
CIMB Target Price13.1 (2011-08-08)

Accounting Ratio
Return on Equity47.37%
Dividend Yield3.21%
Profit Margin10.42%
Tax Rate15.38%
Asset Turnover1.4778
Net Asset Value Per Share4.05
Net Tangible Asset per share3.7
Price/Net Tangible Asset Per Share5.11
Cash Per Share1.56
Liquidity Current Ratio1.5542
Liquidity Quick Ratio1.1742
Liquidity Cash Ratio0.5765
Gearing Debt to Equity Ratio0.8067
Gearing Debt to Asset Ratio0.4464
Working capital per thousand Ringgit sale13.8%
Days to sell the inventory39
Days to collect the receivables49
Days to pay the payables70

My notes based on 2011 quarter 3 report (number in '000):-
- Lower revenue than FY10Q3 mainly due to lower volume of dairy products sold in Malaysia

- Group operating profit declined 6% mainly due to lower volume and margin erosion from dairy products in Malaysia

- Operating profit for soft drinks division improved 15% on favourable product mix, operating cost saving and lower event related promotional expenses. Dairies Thailand’s operating margin remained stable for the quarter

- Group PBT for the quarter of RM86 million was 47% lower than the preceding quarter which had included the profit from the sale of the college building & factory site and gains on the divestment of Brampton amounting to RM60 million. Excluding property and others, PBT from the F&B business units for the current quarter of RM83.7million was 18% lower than preceding quarter due to lower demand for soft drinks and lower profit from dairies Malaysia

- Estimate next 4Q eps after 2011 Q3 result announced = (0.3+0.2151)*2*0.7 = 0.7211, estimate PE on current price 18.08 = 24.5(DPS 0.41)
- Estimate next 4Q eps after 2011 Q2 result announced = 0.3*4 = 1.2(exclude RM53 million from sale of property income), estimate highest/lowest PE = 16.02/14.52 (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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