KLCI Stock - AIRPORT / 5014 - 2010 Quarter 3

Par Value: 1.00
Market Cap : 1100000000*6.2 = 6,820,000,000 (Very Large)
NTA per share : (3323225-1684655)/1100000 = 1.49
P/BV : 6.2/1.49 = 4.1611
Forecast P/E now : (6.2-0.149)/0.264 = 22.92 (High)
ROE : 9.98% (Low)
DY : 0.149/6.2*100 = 2.4% (Low)
Fixed Asset Turnover(4 year) : (0.2837+0.2988+0.3106+0.3038)/4 = 0.2992 (Low)
Liquidity Ratio : 2033153/1400072 = 1.4522 (Low)
Receivables Collection Period : (776934+599970)/2/(1795073/365) = 139 days
My Target Price : Not interested unless associates recover from loss
My Decision : NOT BUY
My Comment : Revenue increasing but profit low, strong cash, above moderate debt and increasing, navps increased, passenger traffic increasing, Cargo volume decreased, KLIA2 target completed by April 2012
Technical Support Price : 5.8, 5.4
Risk Rating : MODERATE
OSK Target Price : 8.47 (01 Nov 10)

My notes based on 2010 quarter 3 report (number in '000):

- The consolidated revenue of the Group for the current quarter under review was 18.3% higher than the corresponding period last year

- The improved revenue in the current quarter under review was mainly contributed by the Group’s airport operations, driven by a stronger recovery in air travel demand. Passenger movements for the current quarter were 6.6% higher than the corresponding period last year, in which the international and domestic passenger movements improved by 13.5% and 0.7% respectively

- The improved revenue was also contributed by growth in the retail business as well as higher rental revenue derived from additional commercial spaces

- Revenue from non-airport operations, however, dropped by 1.3% from the corresponding period last year, mainly due to lower revenue recorded in project and repair maintenance services as well as the agriculture segment by 16.4% and 6.0% respectively. The reduction in revenue from project and repair maintenance services was mainly attributed to the lower number of projects secured during the period. Despite the higher Fresh Fruit Bunch price, revenue from the agriculture segment was lower than the same period of last year due to the lower total crop harvested (2010: 65,661MT / RM509 Vs 2009: 76,555MT/ RM419) attributable to the clearing of a portion of the plantation land to make way for the construction of the new KLIA 2

- Operating profit for the current quarter and financial period-to-date under review improved by 12.2% and 16.6% respectively as compared to corresponding period last year. The favourable variance was due to higher revenue but reduced by higher staff costs, repair and maintenance and provision for doubtful debts

- Profit before tax and zakat (PBT) for the current quarter and financial period-to-date under review, however, were lower than the corresponding period last year by 17.9% and 9.5% respectively, mainly due to the adoption of FRS 139 resulting in the higher share of losses in an associate company, whereby, the concession payable by the associate company was recognized at fair value and subsequently at amortized cost. Gains and losses arising from the changes in the fair value were recognized in the income statement

- In addition, the PBT figure for the corresponding financial period-to-date under review in the preceding year had included a reversal of lease rental payable to the Government totaling RM52.0 million and a backdated user fee amount in respect of financial year 2008 paid to the Government of RM45.8 million subsequent to the signing of the Operating Agreements

- There were also other one-off transactions pursuant to the signing of the Operating Agreements and Share Sales Agreements for the disposal of Sepang International Circuit Sdn Bhd and NECC Sdn Bhd. However, after considering the said transactions, operationally, the Group had performed better as reflected by the higher passenger and revenue numbers

- The EP statement is disclosed on a voluntary basis. EP is a measure of value created by a business during a single period reflecting how much return a business makes over its cost of capital, that is, the difference between the Company’s rate of return and cost of capital

- The Group recorded an economic profit of RM28.7 million for current quarter under review as compared to RM22.3 million in the corresponding period last year and RM85.1 million for financial period-to-date under review as compared to RM 54.8 million in the corresponding period last year

- The consolidated revenue of the Group for the current quarter under review was slightly higher by 2.4% as compared to the immediate preceding quarter, mainly due to higher aeronautical revenue which was attributable to stronger passenger numbers. Passenger movements for the current quarter were 2.0% higher than the immediate preceding quarter, in which passenger movements for international improved by 5.3% whereas the domestic passenger declined by 2.0%

- Estimate next 4Q eps after 2010 Q3 result announced = 0.06*4*1.1 = 0.264(associates increasing loss), estimate PE on current price 6.2 = 22.92(DPS 0.149)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.3233*0.95 = 0.3071, estimate highest/lowest PE = 19.12/16.55 (DPS 0.229)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.3429*0.9 = 0.3086 (10% drop from 0.3429), estimate highest/lowest PE = 17.24/14.81 (DPS 0.229)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.086*4 = 0.344, estimate highest/lowest PE = 13.97/12.89 (DPS 0.233)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.0758*4 = 0.3032, estimate highest/lowest PE = 15.72/11.36 (DPS 0.233)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.068*4 = 0.272, estimate highest/lowest PE = 13.18/11.6 (DPS 0.1855)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.0695*4 = 0.278, estimate highest/lowest PE = 13.07/10.27 (DPS 0.1855)
- Estimate next 4Q eps after 2008 Q4 result announced = 0.069*4 = 0.276, estimate highest/lowest PE = 12.37/7.63 (DPS 0.1855)

AIRPORT latest news (English)