KLCI Stock - CSCSTEL / 5094 - 2010 Quarter 3

Par Value: 1.00
Market Cap : 380000000*1.82 = 691,600,000 (Moderate)
NTA per share : 782171/373200 = 2.1
P/BV : 1.82/2.1 = 0.8667
Forecast P/E now : (1.82-0.14)/0.162 = 10.37 (High)
ROE : 12.52% (Moderate)
DY : 0.14/1.82*100 = 7.69% (High)
Fixed Asset Turnover(4 years) : (1.2188+0.9499+1.6022+1.5045)/4 = 1.3189 (High)
Liquidity Ratio : 548106/38013 = 14.4189 (Very Strong)
Receivables Collection Period : (80435+107847)/2/(1049756/365) = 32 days (Good)
My Target Price : Not interested unless steel utilization increasing
My Decision : NOT BUY
My Comment : Revenue and profit dropped a lot, receivables decreased, strong cash, good cash flow, low debt, steel price slightly increasing, material cost increasing, steel production decreasing, steel utilization slightly increased
Technical Support Price : 1.7, 1.6
Risk Rating : HIGH

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

- The Group achieved a significant decrease of revenue and profit before tax for the current quarter of 26% lower and 96% respectively than that of its corresponding quarter

- The drop in revenue is due to contraction in sales volume as a result of sluggish demand. The reduction of profit before tax was mainly the results of lower sales volume and high cost of raw materials which necessitated a write-down of inventories of about RM10 million to net realizable value

- The Group’s revenue has decreased significantly by 36% compared to preceding quarter. The decrease in revenue is due to sales volume contraction and lower selling prices of our steel products

- The decrease in revenue together with inventories write-down have resulted Group’s profit before tax to reduce significantly by 94% the preceding quarter

- Estimate next 4Q eps after 2010 Q3 result announced = 0.18*0.9 = 0.162, estimate PE on current price 1.82 = 10.37(DPS 0.14)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.2936*0.9 = 0.2642 (10% decrease due to global steel price decreasing), estimate highest/lowest PE = 6.55/5.6 (DPS 0.2)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.2936 (maintained forecast eps due to lower margin), estimate highest/lowest PE = 5.99/4.67 (DPS 0.2)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.2936 (20% growth from 0.2442, world steel price increasing), estimate highest/lowest PE = 6.13/4.6 (DPS 0.2)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.24, estimate highest/lowest PE = 6.42/4.92 (DPS 0.02)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.1012, estimate highest/lowest PE = 13.83/9.88 (DPS 0.02)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.0612, estimate highest/lowest PE = 18.3/15.44

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