KLCI Stock - LATEXX / 7064 - 2010 Quarter 2

Market Cap : 211063113*3.49 = 736,610,264.37 (Medium)
NTA per share : (219150-20358)/261575 = 0.76 (Increased)
P/BV : 3.49/0.76 = 4.5921
Forecast P/E now : (3.49-0.1)/0.3462 = 9.792 (Moderate)
ROE : 38.76% (High, increased)
DY : 0.1/3.49*100 = 2.87% (Low)
Fixed Asset Turnover(3 year) : (1.131+1.0435+0.9303)/3 = 1.0349 (High, increasing)
Liquidity Ratio : 175153/114574 = 1.5287 (Low, increasing)
Receivables Collection Period : (77957+40058)/2/(444336/365) = 48 days (Acceptable, shorter)
My Target Price : 3.42+0.1 = 3.52 (PE 10, EPS 0.3416, DPS 0.1)
My Decision : NOT BUY unless price below 3.3
My Comment : Revenue and profit increasing, good cash flow, above moderate debt but decreasing, navps increasing, increase in raw material cost, weakening of US dollar, disease getting under control
Technical Support Price : 3.4, 3.3
Risk Rating : MODERATE

My notes based on 2010 Quarter 2 report (number in '000):-
- Compared to the same quarter last year, the Group’s revenue increased by 80.7% and profit before tax increased by 111.3% respectively
- For the current year to date, Group revenue increased by 80.1% and profit before tax increased by 130.4% respectively
- The increases in the Group’s revenue and profit were mainly driven by recent capacity expansion and fine tuning of glove production lines coupled with aggressive marketing strategy as well as overall cost savings
- For the current quarter, revenue is 6.6% higher, and profit before tax was 3.7% higher at compared to the preceding quarter. The profit after tax is 4% higher compared to the preceding quarter. The increase in the Group’s revenue and profit were due principally to increased sales volume and improved overall efficiency achieved giving rise to lower overheads, operational and supervision costs. However, the Group faces strong challenges from the increase in average latex price and the weakening of US dollar in the current quarter as compared to preceding quarter
- Estimate next 4Q eps after 2010 Q2 result announced = 0.0824*4 = 0.3296+0.012(QbQ improvement adjustment) = 0.3416, estimate PE on current price 3.49 = 9.79(DPS 0.1)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.0792*4 = 0.3168+0.02(QbQ improvement adjustment) = 0.3368, estimate highest/lowest PE = 11.46/9.62 (DPS 0.05)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.0675*4 = 0.27+0.02(QbQ improvement adjustment) = 0.29, estimate highest/lowest PE = 14.62/12.14 (DPS 0.02)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.0566*4 = 0.2264, estimate highest/lowest PE = 21.78/10.42 (DPS 0.02)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.0586*4 = 0.2344, estimate highest/lowest PE = 11.99/7.81 (DPS 0.02)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.047*4 = 0.188, estimate highest/lowest PE = 10.37/4.2 (DPS 0.02)

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