KLCI Stock - TGUAN / 7034 - 2010 Quarter 3

Company Info

Market Capital (Capital Size)	107,308,590 (Small)
Par Value	RM 1.00

My Analysis

Forecast P/E now	(1.02-0.04)/0.18 = 5.44 (Moderate)
Target Price	1.17+0.04 = 1.21 (PE 6.5, EPS 0.18, DPS 0.04)
Decision	BUY
Comment	Revenue increased and higher than preceding year corresponding quarter, eps second consecutive quarter decreasing and also lower than preceding year corresponding quarter, got free and positive net cash flow, liquidity ratio increased at moderate level now, gearing ratio decreased to below moderate level now, all accounting period shorter
First Support Price	0.93
Second Support Price	0.88
Risk Rating	MODERATE

Accounting Ratio

Return on Equity	7.82%
Dividend Yield	3.92%
Profit Margin	2.87%
Tax Rate	4.03%
Asset Turnover	1.5782
Net Asset Value Per Share	1.99
Net Tangible Asset per share	1.99
Price/Net Tangible Asset Per Share	0.49
Cash Per Share	0.43
Liquidity Current Ratio	2.7431
Liquidity Quick Ratio	1.7456
Liquidity Cash Ratio	0.6705
Gearing Debt to Equity Ratio	0.3843
Gearing Debt to Asset Ratio	0.2776
Working capital per thousand Ringgit sale	25.7%
Days to sell the inventory	56
Days to collect the receivables	55
Days to pay the payables	40

My notes based on 2010 quarter 3 report (number in '000):-
- The Group registered a revenue for the nine months ended 30 September 2010 of RM348.948 million as compared with RM293.602 million for the nine months ended 30 September 2009, an increase of 18.85%. The increase in revenues were mainly due to the higher average prices of raw materials which translated to higher selling prices as well as the increase in export volume of the group's products compared to the corresponding period in 2009

- Group profit before taxation for the quarter ended 30 September 2010 was RM14.288 million, an increase of 4.57% over the RM13.663 million registered in the preceding year corresponding quarter in 2009

- For the three months third quarter ended 30 September 2010, Group revenue grew by 19.64% from RM103.464 million to RM123.787 million as compared to the corresponding quarter in 2009. The increase in revenues were mainly due to the higher average prices of raw materials compared to the corresponding period in 2009 which translated to higher selling prices

- Profit before taxation for the three months third quarter decreased by 36.39% from RM5.581 million to RM3.550 million as compared to the corresponding quarter in 2009. The decrease in profit before taxation was mainly due to the adjustment made for unrealised losses on foreign exchange which is recognised in the quarter ended 30 September 2010 as required under FRS 139

- The revenue for the quarter ended 30 September 2010 increased by RM12.720 million or 11.45% while profit before taxation decreased by RM0.858 million or 19.46% as compared to the preceding quarter. The increase in revenue was mainly due to the higher demand for the group's plastic packaging products during the current quarter compared to the preceding quarter. The decrease in profit before taxation was mainly due to the adjustment for unrealised losses on foreign exchange which is recognised in the quarter ended 30 September 2010 as required under FRS 139

- Estimate next 4Q eps after 2010 Q3 result announced = 0.045*4 = 0.18(profit margin around 4%), estimate PE on current price 1.02 = 5.44(DPS 0.04)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.04*4 = 0.16, estimate highest/lowest PE = 6.38/5.19(DPS 0.04)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.1351*1.1 = 0.1486 (10% increase), estimate highest/lowest PE = 7.81/4.98 (DPS 0.04)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.1351 (revenue growth but cost also increasing), estimate highest/lowest PE = 5.92/5.26 (DPS 0.04)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.134, estimate highest/lowest PE = 6.42/5.45 (DPS 0.02)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.1138, estimate highest/lowest PE = 7.73/6.63 (DPS 0.02)

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