KLCI Stock - TM / 4863 - 2010 Quarter 2

Market Cap : 3577401980*3.4 = 11,841,200,553.80 (Large)
NTA per share : (7358400-312900)/3559100 = 1.98
P/BV : 3.4/1.98 = 1.62
Forecast P/E now : (3.4-0.26)/0.1814 = 17.36 (High)
ROE : 9.86% (Low)
DY : 0.26/3.4*100 = 7.62% (High)
Fixed Asset Turnover(3 year) : (0.4256+0.4604+0.3797)/3 = 0.4219 (Low)
Liquidity Ratio : 6453400/4187900 = 1.541 (Low)
Receivables Collection Period : (2314100+2898000)/2/(8649400/365) = 109 days
My Target Price : Not interested unless revenue and profit increase more
My Decision : NOT BUY
My Comment : Revenue not much increase, profit decreased, good cash flow, high debt and increased, navps decreased
Technical Support Price : 3.3
Risk Rating : MODERATE
OSK Target Price : 3.28 (24 Aug 10)

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

- For the current quarter under review, the Group revenue increased by 1.0% as compared to the second quarter 2009, mainly attributed to higher revenue from data and Internet and multimedia, which mitigated the impact of lower voice revenue due to lower usage

- Data revenue increased by 14.5% in second quarter compared to the same quarter 2009 arising from demand for higher bandwidth services

- Internet and multimedia revenue registered 7.5% growth from second quarter 2009 to the current quarter arising from growth in broadband customers to 1.54 million in the current quarter from 1.37 million in the corresponding quarter 2009

- Operating profit before finance cost decreased by 27.5% compared to the same quarter last year primarily due to lower gain on disposal of quoted investment in current year quarter and absence of gain on disposal of Axiata’s rights (RM66.0 million) recorded in second quarter last year

- Group profit after tax and minority interests (PATAMI) decreased by 53.2% as compared to the corresponding quarter in 2009. This was mainly attributed to lower other operating income as explained above and lower unrealised exchange gain on translation of foreign currency borrowings of RM18.1 million as compared to RM123.2 million in the same quarter in 2009

- The current quarter Group revenue increased by 1.2% as compared to the first quarter 2010, primarily due to higher revenue from data services and non-telecommunications services net of lower revenue from other telecommunications services

- Operating profit before finance cost decreased by 17.8% as compared to the preceding quarter mainly due to higher operating costs

- The current quarter Group PATAMI was 48.8% lower than recorded in the preceding quarter primarily due to higher operating costs and lower unrealized foreign exchange gain on borrowings

- Estimate next 4Q eps after 2010 Q2 result announced = 0.0504*4*0.95 = 0.1814, estimate PE on current price 3.41 = 17.36(DPS 0.26)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.0606(average of recent 4Q eps)*4 = 0.2424, estimate highest/lowest PE = 13.9/12.46 (DPS 0.23)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.0479*4 = 0.1916, estimate highest/lowest PE = 17.38/14.87 (DPS 0.23)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.0505*4 = 0.202, estimate highest/lowest PE = 15.54/13.71(DPS 0.22)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.2, estimate highest/lowest PE = 15.45/13.85 (DPS 0.22)

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