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Friday, February 3, 2012

KLCI Stock - HUAAN / 2739 - 2011 Quarter 3

Company Info 
Market Capital (Capital Size)286,188,493 (Small)
Par ValueRM 0.50

My Analysis 
Forecast P/E now(0.255-0.00178)/0.0082 = 30.88 (High)
Target Price0.07+0.00178 = 0.07 (PE 8.0, EPS 0.0082, DPS 0.00178)
DecisionNot interested unless stock price follow Bolinger upper band moving up
Revenue increased 5.1% and was fourth consecutive quarter increasing (higher than preceding year corresponding quarter 17.2%), eps decreased 50% but higher than preceding year corresponding quarter 44.4%, cash generated from operating is more than enough to cover all expenses, stronger liquidity ratio at moderate level now, lower gearing ratio from below moderate to low level now, all accounting ratio are good, lower inventory can indicate Group products demand decrease
First Support Price0.25
Second Support Price0.19
Risk RatingHIGH

Research House
OSK Target Price0.23 (2011-11-29)

Accounting Ratio 
Return on Equity1.14%
Dividend Yield0.70%
Profit Margin0.38%
Tax Rate-
Asset Turnover1.7743
Net Asset Value Per Share0.66
Net Tangible Asset per share0.56
Price/Net Tangible Asset Per Share0.44
Cash Per Share0.04
Liquidity Current Ratio2.7485
Liquidity Quick Ratio1.7877
Liquidity Cash Ratio0.4358
Gearing Debt to Equity Ratio0.14
Gearing Debt to Asset Ratio0.1228
Working capital per thousand Ringgit sale12.1%
Days to sell the inventory24
Days to collect the receivables31
Days to pay the payables25

Technical Analysis 
SMA 200.256 (Uptrend 10 days)
SMA 500.254 (Same)
SMA 1000.242 (Same)
SMA 2000.278 (Downtrend)
MACD0.001418 (Downtrend 4 days)
MACD Histogram-0.000390 (Downtrend 11 days)

My notes based on 2011 quarter 3 report (number in '000):-
- Higher revenue than FY10Q3 was primarily attributed to the continued upward trend experienced in the pricing of the metallurgical coke and a general increase in sales volume. The average price of metallurgical coke saw an improvement of approximately 17% whilst sales volume grew by approximately 3% during the current quarter compared with those in the preceding year corresponding quarter. Further improving the Group‟s consolidated revenue are the continued robust pricing of the by-products seen in the current quarter compared to those in the corresponding quarter in the preceding year. The average prices of ammonium sulphate, crude benzene, coal slime and middlings during the current quarter under review have increased by approximately 108%, 29%, 34% and 16% respectively while only the prices of tar oil suffered a slight setback of 7% compared to the same quarter last year

- In tandem with the increase in the prices of commodities, the average price of our raw material (i.e. coking coal) also saw an increase of approximately 18%. Coupled with an increase in sales/production volume, the cost of sales for the current quarter under review had recorded an increase of approximately 17%

- Higher pbt than FY10Q3 due to improvements seen in the prices of metallurgical coke and the by-products as well as the relatively higher sales volume, the Group managed to record a better gross profit

- Higher revenue than FY11Q2 primarily attributed to a 2% increase in sales volume as well as higher average pricing of metallurgical coke and some of its by-products. The average prices for metallurgical coke, ammonium sulphate, crude benzene and coal slime during the current quarter under review were up by 3%, 15%, 3% and 6% respectively while tar oil and middlings were down by 7% and 1% respectively

- Higher cost than FY11Q2 was due to an increase in sales/production volume as well as the higher average coking coal price by 7%

- Lower pbt than FY11Q2 due to increase in the average price of metallurgical coke was lower than that of the increase in the average coking coal price hence recorded a slightly lower profit

- Estimate next 4Q eps after 2011 Q3 result announced = 0.0039*2*1.05 = 0.0082, estimate PE on current price 0.255 = 30.88(DPS 0.00178)
- Estimate next 4Q eps after 2011 Q2 result announced = 0.007, estimate highest/lowest PE = 41.17/22.34 (DPS 0.00178)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.0035*2 = 0.007, estimate highest/lowest PE = 49.75/29.75 (DPS 0.00178)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.0027*4*1.05 = 0.0113, estimate highest/lowest PE = 35.24/27.72 (DPS 0.00178)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0052*2 = 0.0104, estimate highest/lowest PE = 39.42/31.73

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