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Tuesday, September 27, 2011

KLCI Stock - SIME / 4197 - 2011 Quarter 4

Company Info
Market Capital (Capital Size)48,376,183,839 (Very Large)
Par ValueRM 0.50

My Analysis
Forecast P/E now(8.05-0.3)/0.6708 = 11.55 (Moderate)
Target Price10.73+0.3 = 11.03 (PE 16.0, EPS 0.6708, DPS 0.3)
DecisionNot interested unless stock price can sustain above 8.2
Revenue increased 23.2% and was third consecutive quarter increasing and also higher than preceding year corresponding quarter 41.8% and in addition is highest all the time, eps increased 60% and was largely recover from loss than preceding year corresponding quarter, cash generated from operating is more than enough to cover all expenses, slightly stronger liquidity ratio at low level now, lower gearing ratio at above moderate level now, all accounting ratio are good, most segment growth, CPO price more likely to go downtrend
First Support Price8.0
Second Support Price7.5

Research House
Maybank Target Price10.6 (2011-03-24)
RHB Target Price10.6 (2011-03-24)
AMMB Target Price10.6 (2011-04-26)
TA Target Price11.16 (2011-04-26)
CIMB Target Price10.9 (2011-05-27)
OSK Target Price8.47 (2011-05-30)
Credit Suisse Target Price8 (2011-06-21)
Kenanga Target Price11.06 (2011-07-26)
Affin Target Price11.09 (2011-08-10)
HwangDBS Target Price10.4 (2011-08-11)
MIDF Target Price10.55 (2011-08-24)
ECM Target Price10.95 (2011-08-26)
HLG Target Price10.6 (2011-08-26)
UOB Target Price10.4 (2011-09-21)

Accounting Ratio
Return on Equity14.77%
Dividend Yield3.73%
Profit Margin15.49%
Tax Rate31.79%
Asset Turnover0.9969
Net Asset Value Per Share4.0
Net Tangible Asset per share3.98
Price/Net Tangible Asset Per Share2.21
Cash Per Share0.92
Liquidity Current Ratio1.7598
Liquidity Quick Ratio1.0488
Liquidity Cash Ratio0.4191
Gearing Debt to Equity Ratio0.7507
Gearing Debt to Asset Ratio0.4209
Working capital per thousand Ringgit sale23.5%
Days to sell the inventory89
Days to collect the receivables59
Days to pay the payables83

My notes based on 2011 quarter 4 report (number in '000):-
- Plantation division registered a 56% increase in profit due to the better average crude palm oil (CPO) price realised of RM2,906 per tonne coupled with the higher fresh fruit bunches (FFB) production and offset by the lower oil extraction rate

- Overall the Group’s FFB yield at 21.5 MT was higher compared to that in the prior year of 20.6 MT. The higher FFB yield was mainly driven by higher production in Indonesia attributable to the additional hectarage coming into maturity

- Downstream operations however registered a loss of RM74.6 million largely due to the impairment provision for biodiesel and bioganic assets of RM114.0 million and the thin refining margins caused by the narrowing price spread between CPO and refined products

- Property division’s contribution fell by 8% primarily due to the slower off-take of certain products, deferment in project launches, write off of project costs of RM19.7 and impairment of overseas properties of RM77.7 million

- Industrial division achieved a commendable performance of RM1,068.0 million which is an increase of 41% from that of the previous financial year. This was achieved on the back of strong sales in Australia/ Pacific Islands, China and Malaysia and better price realisations

- Motors Division posted a 64% jump in contribution due to the strong and sustained demand across all regions, and particularly due to the demand generated by new models produced by BMW, Hyundai and Ford during the financial year

- Energy & Utilities recorded positive turnaround was largely due to the RM98.5 million provision write-back following the Close-Out Agreement with Maersk Oil Qatar and better earnings from the Port and Water operations in China

- The results from Healthcare increased by 19% mainly due to the higher turnover, additional revenue stream from management consultancy services in Vietnam and increased number of student intake in the education sector

- Other businesses suffered a loss due largely to the impairment provisions made on an available-for-sale investment and assets totaling RM79.1 million and the lower returns from the insurance sector

- Estimate next 4Q eps after 2011 Q4 result announced = 0.6098*1.1 = 0.6708, estimate PE on current price 8.05 = 11.55(DPS 0.11)
- Estimate next 4Q eps after 2011 Q3 result announced = (0.146+0.1365)*2 = 0.565, estimate highest/lowest PE = 16.27/14.94 (DPS 0.11)
- Estimate next 4Q eps after 2011 Q2 result announced = (0.146+0.1089)*2 = 0.5098(cpo price decreasing but offset by contracts awarded), estimate highest/lowest PE = 18.22/17.01 (DPS 0.11)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.1271*4*1.1 = 0.5592(ROE 3.5% per quarter with condition CPO price continue maintain high), estimate highest/lowest PE = 16.79/15.22 (DPS 0.1)
- No estimate next 4Q eps after 2010 Q4 result announced
- No estimate next 4Q eps after 2010 Q3 result announced
- Estimate next 4Q eps after 2010 Q2 result announced = 0.37, estimate highest/lowest PE = 22.22/19.59 (DPS 0.22)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.34, estimate highest/lowest PE = 26.44/23.76(DPS 0.2)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.37, estimate highest/lowest PE = 24.43/21.59 (DPS 0.2)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.34, estimate highest/lowest PE = 24.35/18.91 (DPS 0.27)

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