KLCI Stock - OSK / 5053 - 2010 Quarter 1

Market Cap : 961184123*1.28 = 1,230,315,677.44 (Moderate)
NTA per share : (1419213-208825)/826824 = 1.46
P/BV : 1.28/1.46 = 0.8767
Forecast P/E now : (1.28-0.075)/0.156 = 7.72 (Moderate)
ROE : 9.19% (Low)
DY : 0.075/1.28*100 = 5.86% (Moderate)
Fixed Asset Turnover(3 year) : Not Applicable
Liquidity Ratio : Not Applicable
Receivables Collection Period : Not Applicable
My Target Price : 1.56+0.075 = 1.64 (EPS 0.156, PE 10, DPS 0.075)
My Decision : BUY
My Comment : Revenue increased but profit drop, negative net cash flow, high debt, navps decreased
Technical Support Price : 1.22, 1.1
Risk Rating : MODERATE

My notes based on 2010 Q1 report (number in '000):
- The Group's profit before tax ("PBT") for the first quarter ended 31 March 2010 (1Q10) increased by more than 5.8 times year-on-year ("Y-o-Y"). The Group registered a 86% surge in revenue compared to the previous year corresponding quarter. The significant improvement in financial performance was mainly due to improved earnings from the business expansion particularly in investment banking activities
- OSK Investment Bank Berhad ("OSKIB"), the wholly-owned subsidiary of the Company is the main
contributor accounted for 61% of the Group's PBT; followed by Singapore subsidiary, DMG & Partners Securities Pte. Ltd. 25% and Malaysian unit trust fund manager, OSK-UOB Unit Trust Management Berhad 8%. Indonesian subsidiary, PT OSK Nusadana Securities Indonesia and Cambodian subsidiary, OSK Indochina Bank Limited, also contributed positive results and were able to offset the losses reported by Hong Kong subsidiary
- Investment Banking which consists mainly of Treasury, Corporate Advisory, Capital Market and
Structured Products contributed 51% of the Group’s PBT for 1Q10 as compared to 26% in last year’s corresponding period
- Loan, Advances and Financing and Fund Management reported improved earnings which contributed
about 15% or 5% of the Group's PBT respectively
- Equities & Futures broking recorded 25% of the Group's PBT. For Malaysian equities business, the Bank continued to maintain our dominant position as market leader
- Total PBT contribution from overseas businesses to the Group increased to 24% in 1Q10 from 15% in the previous year corresponding quarter
- Contribution from the Group’s Singapore operations surged in 1Q10 with its PBT expanding more than 3 times in the previous corresponding quarter. OSK Indochina Bank Ltd, which commenced business operations on 10 October 2008 started to contribute a PBT of RM324,000 in 1Q10 compared to a loss of RM365,000 in 1Q09. The Indonesian subsidiary contributed PBT of RM1.40 million
- The Group recorded a drop of revenue as compared to the immediate preceding quarter, 4Q09. The decline was mainly due to the impairment loss of RM15.40 million provided in 1Q10 for securities available-for-sale. Without the effect of the impairment loss, the Group would have achieved a PBT of RM73.58 million
- Estimate next Q eps after 2010 Q1 result announced = 0.039*4 = 0.156, estimate PE on current price 1.28 = 7.72(DPS 0.075)
- Estimate next Q eps after 2009 Q4 result announced = 0.0449*4 = 0.1796, estimate PE on current price 1.29 = 8.21/6.38 (DPS 0.075)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.0525*4 = 0.21, estimate highest/lowest PE = 8.38/6.9 (DPS 0.05)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.0570*4 = 0.228, estimate highest/lowest PE = 6.62/5.83 (DPS 0.05)
- After 2009 Q1 loss result announced, no estimate
- Estimate next 4Q eps after 2008 Q4 result announced = 0.0240*4 = 0.096, estimate highest/lowest PE = 14.32/7.86 (DPS 0.075)

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