KLCI Stock - BSTEAD / 2771 - 2010 Quarter 2

Market Cap : 940162499*4.39 = 4,127,313,370.61 (Large)
NTA per share : (4082600-1015100)/934700 = 3.28
P/BV : 4.39/3.28 = 1.3384
Forecast P/E now : (4.39-0.325)/0.336 = 12.1 (High)
ROE : 10.8%
DY : 0.325/4.39*100 = 7.4% (High)
Fixed Asset Turnover(3 year) : (0.6694+0.6515+0.8688)/3 = 0.7299 (Low)
Liquidity Ratio : 1815000/3861200 = 0.4701 (Weak)
Receivables Collection Period : (1015100+908535)/2/(5878273/365) = 59 days (Acceptable)
My Target Price : 4.03+0.325 = 4.36 (PE 12, EPS 0.336, DPS 0.325)
My Decision : NOT BUY unless price below 4
My Comment : Revenue maintaining 1.4 billion, profit decreasing, cash flow slightly better, above moderate debt but decreasing, navps increasing, CPO price increasing, heavy industries recover in the oil and gas sector
Technical Support Price : 4
Risk Rating : MODERATE

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

- For the 2nd quarter, the Group posted an 126% increase of unaudited profit before tax compared with the profit posted for the 2nd quarter of FY2009

- Group revenue for the half year was 20% higher than that recorded during the corresponding period last year. Notable increase in revenue from both the Plantation and Trading Divisions was attributable to the stronger palm product prices and higher sales volume respectively

- The Heavy Industries Division recorded 23% lower pre-tax profit as compared with last year’s mainly due to lower progress billings and cost escalations resulting from delays in completing certain shipbuilding projects. Property Division's pre-tax profit for the six months’ period was 23% lower than last year mainly due to the decline in contribution from property development activity

- The Finance & Investment Division’s profit for the half year was significantly better at RM104.8 million, an increase of RM95 million from last year. The half year results had taken cognition of the RM75 million gain from disposal of BH Insurance (M) Bhd, while better results from Affin Group and interest savings at Boustead Holdings Berhad boosted the bottom line further

- The Trading Division’s pre-tax profit for the six months totalling RM33.4 million was a satisfactory improvement from the gain of RM7.2 million posted last year. During the period, all the operating units in the Division had performed better, with notable increase from BH Petrol operations which enjoyed an increase in sales volumes

- Plantation profit for the current quarter was 52% lower than the preceding quarter. Although CPO price for the current quarter was largely unchanged at RM2,491 (Previous quarter: RM2,499) per MT, the Division’s bottom line was affected by a drop in FFB crop while manuring cost had also increased. Property division’s pre-tax profit for the current quarter was higher than the previous quarter mainly due to the gains from sale of a corporate lot at Mutiara Damansara

- The Finance & Investment Division’s profit for the current quarter was significantly higher, mainly helped by the gain from disposal of BH Insurance. The Heavy Industries Division’s profit for the current quarter was 10% better than the preceding quarter on improved margins

- Estimate next 4Q eps after 2010 Q2 result announced = 0.08*4*1.05 = 0.336(0.08 is eps exclude non-repeatable income), estimate PE on current price 4.39 = 12.1(DPS 0.325)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.4699*1.05 = 0.4934(5% increase), estimate highest/lowest PE = 8.3/6.58 (DPS 0.275)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.4934, estimate highest/lowest PE = 7.1/6.31 (DPS 0.275)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.1241*4 = 0.4964, estimate highest/lowest PE = 6.89/6.06 (DPS 0.25)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.0721*4 = 0.2884, estimate highest/lowest PE = 12.17/10.92 (DPS 0.2)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.0934*4 = 0.3736, estimate highest/lowest PE = 11.78/8.94 (DPS 0.2)
- Estimate next 4Q eps after 2008 Q4 result announced = 0.1699*4 = 0.6796, estimate highest/lowest PE = 5.15/3.97 (DPS 0.3)

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