KLCI Stock - AMWAY / 6351 - 2010 Quarter 2

Market Cap : 164385645*8.12 = 1,334,811,437.40 (Large)
NTA per share : (249910-4782)/164386 = 1.49
P/BV : 8.12/1.49 = 5.4497
Forecast P/E now : (8.12-0.52)/0.5497 = 13.83 (Moderate)
ROE : 29.99% (High)
DY : 0.52/8.12*100 = 6.4% (Moderate)
Fixed Asset Turnover(4 year) : (1.8493+1.7274+1.7314+1.7974)/4 = 1.7764 (High)
Liquidity Ratio : 267759/123523 = 2.1677 (Moderate)
Receivables Collection Period : (11264+8694)/2/(690577/365) = 5 days (Good)
My Target Price : 8.8+0.52 = 9.32 (EPS 0.5497, PE 16, DPS 0.52)
My Decision : BUY
My Comment : Revenue and profit increasing, good cash flow, moderate debt and slightly decreased, navps increasing, continue to benefit from strong Ringgit
Technical Support Price : 8
Risk Rating : LOW
OSK Target Price : 10.83 (06 Aug 10)

My notes based on 2010 Quarter 2 report (number in '000):
- The Group’s sales revenue recorded an increase of 9.8% for the quarter under review and 8.4% for the six months ended 30 June 2010 as compared to the corresponding periods in the preceding year. The growth in sales revenue was due to successful promotions and increase in distributors’ productivity driven by enhanced sales and marketing program implemented in the periods under review
- The Group’s profit before tax increased by 35.0% for the quarter under review and 8.6% for the six months ended 30 June 2010 as compared to the corresponding periods in the preceding year mainly due to the higher gross margin arising from the increase in sales and the favorable foreign exchange impact
- The Group’s sales revenue decreased by 4.1% as compared to the preceding quarter higher sales which was due to the pre-price increase buying ahead of the distributor price increase effective 1 March 2010
- The Group’s profit before tax increased 34.0% as compared to the preceding quarter mainly due to the favorable foreign exchange impact
- Estimate next 4Q eps after 2010 Q2 result announced = 0.3335+(0.1246*1.2) = 0.5497, estimate PE on current price 8.12 = 13.83(DPS 0.52)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.3261+(0.099*1.1) = 0.4676(Correction to preceding Q estimated), estimate highest/lowest PE = 16.3/14.71 (DPS 0.5)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.0996*4 = 0.3984, estimate highest/lowest PE = 17.62/16.99 (DPS 0.48)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.1246*4 = 0.4984, estimate highest/lowest PE = 13.98/13.46 (DPS 0.48)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.099*4 = 0.396, estimate highest/lowest PE = 17.6/16.92 (DPS 0.5)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.118*4 = 0.472, estimate highest/lowest PE = 14.79/13.73 (DPS 0.52)
- Estimate next 4Q eps after 2008 Q4 result announced = 0.1332*4 = 0.5328, estimate highest/lowest PE = 13.06/11.75 (DPS 0.54)

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