KLCI Stock - FAVCO / 7229 - 2010 Quarter 2

Market Cap : 176885020*0.825 = 145,930,141.50 (Small)
NTA per share : (178887-9506)/173890 = 0.97 (Decreased)
P/BV : 0.825/0.97 = 0.8505
Forecast P/E now : (0.825-0.04)/0.1362 = 5.76 (High)
ROE : 15.08% (Moderate)
DY : 0.04/0.825*100 = 4.85% (Moderate)
Fixed Asset Turnover(3 year) : (0.8258+0.8267+0.8968)/3 = 0.8498 (Moderate)
Liquidity Ratio : 496113/407486 = 1.2175 (Low)
Receivables Collection Period : (144587+166112)/2/(495097/365) = 114 days (Acceptable)
My Target Price : Not interested unless order book increase more
My Decision : NOT BUY
My Comment : Outstanding order book decreased compared to year 2008 and 2009, strong cash, very high debt but decreasing, navps slightly increased, O&G sector recovery
Technical Support Price : 0.76
Risk Rating : HIGH

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

- For the current period ended 30 June 2010("Q2 2010"), the Group recorded 19.5% lower revenue with 25% lower profit before tax as compared to the preceding period ended 30 June 2009("Q2 2009"), the decrease was mainly due to decrease in sales resulted from slow order intake in Year 2009 attributed to global slowdown

- The Group recorded a 68.4% higher profit before tax for the current quarter as compared to the preceding quarter. The increase was mainly due to increase in sales

- As at 19 August 2010, outstanding order book of the Group is RM450 million of which majority is from oil and gas cranes for the offshore oil and gas exploration and production activities. Remaining are from the shipyard, construction and wind turbine industry

- Estimate next 4Q eps after 2011 Q2 result announced = 0.1602*0.85 = 0.1362(450 million equal to 15% decrease from 2009 Q4 cum_eps), estimate PE on current price 0.825 = 5.76(DPS 0.04)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.1442*0.7 = 0.1009 (30% drop from 0.1442, revenue drop and margin expect will not increase much), estimate highest/lowest PE = 8.42/7.04 (DPS 0.04)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.1442(10% drop from 0.1602, revenue drop and margin expect will not increase much), estimate highest/lowest PE = 6.93/4.92 (DPS 0.04)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.1442, estimate highest/lowest PE = 5.76/4.99 (DPS 0.025)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.1442, estimate highest/lowest PE = 6.45/5.49 (DPS 0.025)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.1442, estimate highest/lowest PE = 8.11/5.72 (DPS 0.025)

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