KLCI Stock - DXN / 5074 - 2011 Quarter 3

Company Info

Market Capital (Capital Size)	358,738,360 (Small)
Par Value	RM 0.25

My Analysis

Forecast P/E now	(1.49-0.085)/0.2121 = 6.62 (Moderate)
Target Price	1.91+0.085 = 1.99 (PE 9.0, EPS 0.2121, DPS 0.085)
Decision	BUY
Comment	Revenue decreased but higher than preceding year corresponding quarter, eps same with revenue, free cash flow increasing and net cash flow increased also, liquidity ratio increasing at high level now, gearing ratio decreasing at below moderate level now, inventory period slightly longer but still acceptable if compared to previous quarter, subsidiaries increasing
First Support Price	1.4
Second Support Price	1.2
Risk Rating	MODERATE

Accounting Ratio

Return on Equity	18.25%
Dividend Yield	5.70%
Profit Margin	23.59%
Tax Rate	19.95%
Asset Turnover	0.9374
Net Asset Value Per Share	0.96
Net Tangible Asset per share	0.91
Price/Net Tangible Asset Per Share	1.65
Cash Per Share	0.17
Liquidity Current Ratio	3.2204
Liquidity Quick Ratio	1.6464
Liquidity Cash Ratio	0.6993
Gearing Debt to Equity Ratio	0.3381
Gearing Debt to Asset Ratio	0.2501
Working capital per thousand Ringgit sale	44.4%
Days to sell the inventory	142
Days to collect the receivables	61
Days to pay the payables	53

My notes based on 2011 quarter 3 report (number in '000):-
- The Group recorded a revenue of RM64.6 million for the current quarter ended 30 November 2010 which was higher than the corresponding quarter revenue of RM62.3 million. The increase in revenue was due to the Multi Level Marketing segment revenue continued to growth steadily by RM5.5 million, however the revenue contributed from property and others segment declined by RM3.2 million compared to the corresponding quarter. Accumulatively, the Group recorded RM 214.8 million revenue for the nine months financial period ended 30 November 2010

- The Group recorded a profit before tax (“PBT”) of RM 15.2 million for the current quarter ended 30 November 2010 as compared to the corresponding quarter of RM 12.1 million with PBT margin of 23.6% compared to 19.4%. The PBT for the current quarter has been accounted for the final provision of its investment in CapOne subordinated bond of RM0.5 million under the Collateralised Loan Obligation programme. The higher PBT margin was contributed from its Multi Level Marketing segment especially of the higher overseas sales of its health food supplements products

- The Group reported a revenue of RM 64.6 million in the current quarter ended 30 November 2010 which was lower than the preceding quarter revenue of RM 82.5 million with PBT margin of 23.6% compared to 18.6%. The decreased in revenue was mainly due to the lower revenue generated from its property and others segment. The higher PBT margin was contributed from its Multi Level Marketing segment

- Estimate next 4Q eps after 2011 Q2 result announced = 0.0505*4*1.05 = 0.2121, estimate PE on current price 1.49 = 6.62(DPS 0.085)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.1465*1.05 = 0.1538, estimate highest/lowest PE = 8.99/4.5 (DPS 0.0375)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.1238*0.9 = 0.1114(10% drop), estimate highest/lowest PE = 6.24/4.44 (DPS 0.035)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0397*4*0.8 = 0.127, estimate highest/lowest PE = 5.28/4.49 (DPS 0.035)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.0615*2 = 0.123, estimate highest/lowest PE = 5.81/4.11 (DPS 0.035)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.0874*1.1 = 0.0961, estimate highest/lowest PE = 6.87/3.64 (DPS 0.03)

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