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My Analysis
Research House
Accounting Ratio
My notes based on 2010 quarter 3 report (number in '000):-
- The reduction in the consolidated revenue of approximately 7% from RM349.8 million in the preceding year corresponding quarter to RM325.2 million registered in the current quarter under review was primarily attributable to the reduction of sales volume of metallurgical coke by approximately 3%. Despite the favourable upward trend in the pricing of metallurgical coke and that of the by-products in the current quarter experienced by the Group, the appreciation of the Ringgit against Renminbi of 8% over the comparative periods had led to lower translated sales value in Ringgit term. The average prices of metallurgical coke, ammonium sulphate, crude benzene, tar oil, coal gas, coal slime and middlings during the current quarter under review have increased by approximately 3%, 20%, 24%, 41%, 1%, 27% and 17% respectively in the current quarter compared to the same quarter last year
- In tandem with the reduction in sales volume, the cost of sales for the current quarter under review had decreased by approximately 2% to approximately RM318.9 million compared to RM326.1 million recorded in the preceding year corresponding quarter. However, the increase in the average price of raw material (i.e. coking coal) by approximately 11% in the current quarter compared to the average price registered in the preceding year corresponding quarter was largely offset by the effects of the Ringgit appreciation against the Renmimbi over the periods, thus effectively lowering the translated value of the cost of sales
- As a result of the extent of increase in the average price of the metallurgical coke being significantly lower than the increase in the average price of the coking coal, a lower margin was recorded during the quarter under review. The favourable pricing of the by-products however still proved insufficient to counter the hike experienced on the price of the coking coal. As such, the Group has only managed to record a gross profit of approximately RM6.2 million compared to approximately RM23.7 million recorded in the preceding year corresponding quarter. The Group has registered a profit for the period of approximately RM1.0 million for the current quarter under review as compared to a profit of approximately RM18.5 million for the preceding year corresponding quarter
- The Group’s consolidated revenue of approximately RM325.2 million registered during the current quarter represents a reduction of approximately 5% from approximately RM342.5 million in the preceding quarter ended 30 June 2010. The reduction in revenue was primarily attributed to the unfavourable average pricing of the metallurgical coke and some of its by-products in comparison with those prices registered in the preceding quarter. The average prices for metallurgical coke, crude benzene and coal slimes during the current quarter under review were reduced by 10%, 1% and 12% respectively. These fall in prices were however countered to some extent by the increase in the average prices for ammonium sulphate and tar oil of 4% and 2% respectively in the current quarter under review compared to that of recorded in the preceding quarter (second quarter 2010)
- Cost of sales in the current quarter has correspondingly reduced to RM318.9 million compared to RM331.6 million recorded in the preceding quarter ended 30 June 2010, a reduction of approximately 4%. This was attributed to lower average coking coal price by 8% during the quarter under review compared to that of the preceding quarter
- Since the rate of reduction in the average coke price was higher than that of the coking coal price during the quarter under review, the Group has only managed to report a profit for the period of approximately RM1.0 million in the current quarter under review compared to approximately RM4.8 million recorded in the preceding second quarter 2010
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0052*2 = 0.104, estimate PE on current price 0.385 = 37.02
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| Market Capital (Capital Size) | 432,088,509 (Small) |
| Par Value | RM 0.50 |
My Analysis
| Forecast P/E now | 0.385/0.0104 = 37.02 (High) |
| Target Price | 0.0104*8.0 = 0.08 (PE 8.0, EPS 0.0104) |
| Decision | NOT BUY |
| Comment | Revenue second consecutive quarter decreasing and also lower than preceding year corresponding quarter, eps decreased and also lower than preceding year corresponding quarter, free and net cash flow increased, equity still decreasing, low profit margin, liquidity ratio increasing at moderate level now, gearing ratio decreasing at low level now, all accounting period are better compared to historical quarter, coking coal price increased |
| First Support Price | 0.34 |
| Second Support Price | 0.33 |
| Risk Rating | HIGH |
Research House
| OSK Target Price | 0.41 (2010-12-01) |
| RHB Target Price | 0.33 (2010-12-27) |
Accounting Ratio
| Return on Equity | 0.19% |
| Dividend Yield | - |
| Profit Margin | 0.32% |
| Tax Rate | - |
| Asset Turnover | 1.7841 |
| Net Asset Value Per Share | 0.61 |
| Net Tangible Asset per share | 0.52 |
| Price/Net Tangible Asset Per Share | 0.65 |
| Cash Per Share | 0.02 |
| Liquidity Current Ratio | 2.6697 |
| Liquidity Quick Ratio | 1.9078 |
| Liquidity Cash Ratio | 0.3404 |
| Gearing Debt to Equity Ratio | 0.1101 |
| Gearing Debt to Asset Ratio | 0.0991 |
| Working capital per thousand Ringgit sale | 9.3% |
| Days to sell the inventory | 15 |
| Days to collect the receivables | 28 |
| Days to pay the payables | 20 |
My notes based on 2010 quarter 3 report (number in '000):-
- The reduction in the consolidated revenue of approximately 7% from RM349.8 million in the preceding year corresponding quarter to RM325.2 million registered in the current quarter under review was primarily attributable to the reduction of sales volume of metallurgical coke by approximately 3%. Despite the favourable upward trend in the pricing of metallurgical coke and that of the by-products in the current quarter experienced by the Group, the appreciation of the Ringgit against Renminbi of 8% over the comparative periods had led to lower translated sales value in Ringgit term. The average prices of metallurgical coke, ammonium sulphate, crude benzene, tar oil, coal gas, coal slime and middlings during the current quarter under review have increased by approximately 3%, 20%, 24%, 41%, 1%, 27% and 17% respectively in the current quarter compared to the same quarter last year
- In tandem with the reduction in sales volume, the cost of sales for the current quarter under review had decreased by approximately 2% to approximately RM318.9 million compared to RM326.1 million recorded in the preceding year corresponding quarter. However, the increase in the average price of raw material (i.e. coking coal) by approximately 11% in the current quarter compared to the average price registered in the preceding year corresponding quarter was largely offset by the effects of the Ringgit appreciation against the Renmimbi over the periods, thus effectively lowering the translated value of the cost of sales
- As a result of the extent of increase in the average price of the metallurgical coke being significantly lower than the increase in the average price of the coking coal, a lower margin was recorded during the quarter under review. The favourable pricing of the by-products however still proved insufficient to counter the hike experienced on the price of the coking coal. As such, the Group has only managed to record a gross profit of approximately RM6.2 million compared to approximately RM23.7 million recorded in the preceding year corresponding quarter. The Group has registered a profit for the period of approximately RM1.0 million for the current quarter under review as compared to a profit of approximately RM18.5 million for the preceding year corresponding quarter
- The Group’s consolidated revenue of approximately RM325.2 million registered during the current quarter represents a reduction of approximately 5% from approximately RM342.5 million in the preceding quarter ended 30 June 2010. The reduction in revenue was primarily attributed to the unfavourable average pricing of the metallurgical coke and some of its by-products in comparison with those prices registered in the preceding quarter. The average prices for metallurgical coke, crude benzene and coal slimes during the current quarter under review were reduced by 10%, 1% and 12% respectively. These fall in prices were however countered to some extent by the increase in the average prices for ammonium sulphate and tar oil of 4% and 2% respectively in the current quarter under review compared to that of recorded in the preceding quarter (second quarter 2010)
- Cost of sales in the current quarter has correspondingly reduced to RM318.9 million compared to RM331.6 million recorded in the preceding quarter ended 30 June 2010, a reduction of approximately 4%. This was attributed to lower average coking coal price by 8% during the quarter under review compared to that of the preceding quarter
- Since the rate of reduction in the average coke price was higher than that of the coking coal price during the quarter under review, the Group has only managed to report a profit for the period of approximately RM1.0 million in the current quarter under review compared to approximately RM4.8 million recorded in the preceding second quarter 2010
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0052*2 = 0.104, estimate PE on current price 0.385 = 37.02
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