KLCI Stock - KGB / 0151 - 2010 Quarter 2

Market Cap : 74710000*0.765 = 57,153,150 (Very Small)
NTA per share : (36997-199)/74710 = 0.49
P/BV : 0.765/0.49 = 1.5612
Forecast P/E now : (0.765-0.03)/0.95 = 7.74 (High)
ROE : 23.34% (High)
DY : 0.03/0.765*100 = 3.92% (Low)
Fixed Asset Turnover(1 year) : 1.1014 (High)
Liquidity Ratio : 53239/21692 = 2.4543 (Moderate)
Receivables Collection Period : (25942+21317)/2/(67100/365) = 128 days
My Target Price : 0.76+0.03 = 0.79 (PE 8, EPS 0.95, DPS 0.03)
My Decision : NOT BUY unless price supported at 0.66
My Comment : Revenue increased but lower than preceding year corresponding quarter, eps same with revenue, no free cash flow, negative net cash flow, strong cash, profit margin recover to above 15%, liquidity ratio increased at moderate level now, gearing ratio decreased at moderate level now, all accounting period is normal compared to historical quarter
Technical Support Price : 0.665
Risk Rating : HIGH

My notes based on 2010 quarter 2 report (number in '000):-

- The Group recorded a 8% lower revenue as compared to previous corresponding quarter in 2009 mainly due to lower revenue contribution from the Malaysia operations. Despite of lower in revenue, the current quarter has achieved a higher Gross Profit margin and PBT margin compared to the previous corresponding quarter due to the contributions of projects with higher margins

- The Group has recorded higher revenue and profit as compared to the preceding quarter, due to after the festive seasons during the first quarter

- The Group had successfully penetrated into Light Emitting Diode ("LED") industry. On 19 May 2010, KGB was awarded its first LED project in Mainland China. On 28 July 2010, KGB had secured another LED project in Malaysia

- KGB had successfully established a contractual relationship with largest wafer fabrication foundry in Mainland China - Semiconductor Manufacturing International Corporation ("SMIC")

- Estimate next 4Q eps after 2010 Q2 result announced = 0.095, estimate PE on current price 0.765 = 7.74(DPS 0.03)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.03*3+0.01 = 0.1, estimate highest/lowest PE = 9.6/6.6 (DPS 0.03)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.1, estimate highest/lowest PE = 7.7/6.65 (DPS 0.03)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.1, estimate highest/lowest PE = 9/5.8

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