KLCI Stock - MRCB / 1651 - 2010 Quarter 2

Market Cap : 1375083194*2 = 2,750,166,388 (Large)
NTA per share : 1207647/1373959 = 0.88
P/BV : 2/0.88 = 2.2727
Forecast P/E now : (2-0.01)/0.0927 = 21.47 (High)
ROE : 5.08% (Low)
DY : 0.01/2*100 = 0.5% (Low)
Fixed Asset Turnover(3 year) : (0.2499+0.2625+0.3362)/3 = 0.2829 (Low)
Liquidity Ratio : 2295829/716072 = 3.2061 (High)
Receivables Collection Period : (1022401+590336)/2/(902329/365) = 326 days
My Target Price : 2.13+0.01 = 2.14 (EPS 0.0927, PE 23, DPS 0.01)
My Decision : BUY
My Comment : Receivables increasing, profit margin getting better, strong cash, high debt but decreasing, navps decreased due to number of share increased, construction and property division largely improved
Technical Support Price : -
Risk Rating : MODERATE
OSK Target Price : 1.8 (25 Aug 10)

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

- The Group recorded 5% lower revenue for the cumulative 2nd quarter ended 30 June 2010 as compared to the preceding cumulative 2nd quarter ended 30 June 2009. Lower revenue was recorded in the current period partly contributed by larger inter-group revenue elimination for its construction works. Despite lower revenue, the Group recorded a higher profit before taxation of RM33.3 million for the current period ended 30 June 2010 compared to RM11.1 million achieved in the preceding corresponding period ended 30 June 2009. The improved profit was mainly due to recognition of progress profit of its ongoing property development driven by its Kuala Lumpur Sentral projects

- Despite achieving lower revenue in the current quarter, the Group recorded a higher profit before taxation of RM18.3 million compared to RM9.1 million recorded in the preceding corresponding 2nd quarter ended 30 June 2009. Higher profit for the current quarter was mainly contributed by improved operational margins from its construction activities and recognition of progress profit of its ongoing property development derived mainly from the Kuala Lumpur Sentral projects

- Over the next 3 years will see the progressive completion of the on-going construction works and property development within KL Sentral such as the KL Sentral Park, the Shell headquarters and NU Sentral Retail Mall and the Eastern Dispersal Link expressway concession project

- Estimate next 5Q eps after 2010 Q2 result announced = 0.0129,0.0175,0.0202,0.0237,0.0313(calculation is based on receivables, revenue, 8% profit margin and 27% tax rate), exclude 0.0129 then cum_eps is 0.0927, estimate PE on current price 2 = 21.47(DPS 0.01)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.0743, estimate highest/lowest PE = 23.96/18.03 (DPS 0.01)

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