KLCI Stock - ANNJOO / 6556 - 2010 Quarter 2

Market Cap : 522707278*2.55 = 1,332,903,558.90 (Large)
NTA per share : (1006174-8843)/763487 = 1.31
P/BV : 2.55/1.31 = 1.9466
Forecast P/E now : (2.55-0.06)/0.2068 = 12.04 (High)
ROE : 19.75% (Moderate)
DY : 0.06/2.55*100 = 2.35% (Low)
Fixed Asset Turnover(3 year) : (0.7638+0.8104+1.3156)/3 = 0.9633 (Moderate)
Liquidity Ratio : 1284097/1162741 = 1.1044 (Low)
Receivables Collection Period : (189090+161674)/2/(1727957/365) = 37 days (Good)
My Target Price : Not interested unless steel price increase
My Decision : NOT BUY
My Comment : Bad cash flow, high debt and increasing, navps increasing, steel prices decreasing
Technical Support Price : 2.3
Risk Rating : HIGH
OSK Target Price : 2.75 (29 Apr 10)

My notes based on 2010 quarter 2 report (number in '000):
- During the quarter under review, the Group recorded 40% increased of revenue as compared to the corresponding quarter of the preceding year. For the first half of year 2010, the Group’s revenue was increased by 66% as compared to the revenue of the first half of year in 2009
- The increase in revenue was mainly attributable to higher selling price and sales tonnage boosted by a recovery in steel consumption in both international and domestic market as compared to the depressed steel prices and sluggish demand influenced by the global economic slowdown in the corresponding period of the preceding year
- The Group achieved a 28 times higher profit before tax (“PBT”) for the current quarter, compared to the corresponding quarter of the preceding year. On a year-to-date basis, the Group recorded a PBT of RM 123.89 million as compared to a loss before tax of RM 38.17 million for the corresponding period of the preceding year
- The significant improvement in profitability was primarily driven by continuous improvement in productivity coupled with an elevated export tonnage as compared to the corresponding period of the preceding year
- The Group recorded 26% higher revenue for the current quarter, which was 26% higher than the revenue for the preceding quarter. Correspondently, the Group registered a PBT of 67% higher for the current quarter than PBT for the preceding quarter. The improvement in both the revenue and PBT was mainly attributable to the delivery of export tonnages which were committed at higher selling prices despite a sharper-than-expected market correction during the quarter
- Estimate next 4Q eps after 2010 Q2 result announced = 0.0517*4 = 0.2068(0.0517 is average eps of Q110,Q409,Q308, due to steel price decreasing), estimate PE on current price 2.55 = 12.04(DPS 0.06)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.0591*4 = 0.2364, estimate highest/lowest PE = 12.39/9.31 (DPS 0.03)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.048*4 = 0.192, estimate highest/lowest PE = 15.68/13.54 (DPS 0.03)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.0682*4 = 0.2728, estimate highest/lowest PE = 12.17/8.69 (DPS 0.03)

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