KLCI Stock - AHEALTH / 7090 - 2010 Quarter 4

Company Info

Market Capital (Capital Size)	253,035,562 (Small)
Par Value	RM 1.00

My Analysis

Forecast P/E now	(2.7-0.13)/0.336 = 7.65 (Moderate)
Target Price	2.69+0.13 = 2.82 (PE 8.0, EPS 0.336, DPS 0.13)
Decision	BUY
Comment	Revenue decreased 5.1% but higher than preceding year corresponding quarter 10.5%, eps increased 82.9% to highest record (higher than preceding year corresponding quarter 21%), positive free cash flow increasing but positive net cash flow decreased, liquidity ratio increased at moderate level now, gearing ratio decreased at below moderate level now, all accounting periods are good, expecting new income from JB new retail
First Support Price	2.6
Second Support Price	2.4
Risk Rating	MODERATE

Accounting Ratio

Return on Equity	16.61%
Dividend Yield	4.81%
Profit Margin	24.95%
Tax Rate	8.46%
Asset Turnover	1.1794
Net Asset Value Per Share	1.95
Net Tangible Asset per share	1.94
Price/Net Tangible Asset Per Share	1.38
Cash Per Share	0.25
Liquidity Current Ratio	2.513
Liquidity Quick Ratio	1.8033
Liquidity Cash Ratio	0.424
Gearing Debt to Equity Ratio	0.3696
Gearing Debt to Asset Ratio	0.2543
Working capital per thousand Ringgit sale	26.4%
Days to sell the inventory	58
Days to collect the receivables	88
Days to pay the payables	76

My notes based on 2010 quarter 4 report (number in '000):-
- The Group's revenue for the final quarter of 2010 was RM77.5 million and its profit before tax was RM19.4 million. For the 12 months to December 2010, the Group achieved record revenues of RM313.7 million and profit before tax of RM45.1 million, representing increases of 11% and 50% respectively over the result for the previous financial year. After adjusting for non-recurring income, Group pre-tax profit for 2010 is RM 35.0 million, an increase of 31% over that achieved in 2009

- Xepa-Soul Pattinson(Malaysia) Sdn Bhd's(Xepa) full year performance exceeded budget with revenue growth of 14% over 2009, driven by continued strong sales in domestic markets, improved exports and contract manufacturing. During the quarter, Xepa entered into a licensing, manufacturing and supply agreement with GlaxoSmithKline Pharmaceuticals Sdn Bhd in respect of six products for the treatment of cardiovascular and metabolic conditions. Additional production capacity for solid pharmaceutical products and a new Knowledge Centre was commissioned as interim upgrading works were completed

- In the same period, Apex Pharmacy Marketing Sdn Bhd('Apex') secured ISO 9001 certification for its distribution operations in Subang Jaya. Wholesale and Distribution performed well, with improved gross margins. This is attributed to a greater proportion of own brand products in the sales mix and better purchasing. New own brand products launched in the quarter by the Group include Avegesic(meloxicam 15mg) for pain management under the AVEX brand and the AvoMeter range of blood glucose monitoring meters

- Based on unaudited management accounts of the Group's associated company, Xiamen Maidiken Science & Technology Co Ltd('MDK'), China, total profit contribution rose 125% to RM15.9 million for year 2010, which includes a non-recurring component of RM10.1m. This non-recurring component is attributable to the issuance of shares at a premium to new investors by MDK's intermediate holding company for its retail and distribution operations, Luyan(Fujian) Pharma Co., Ltd. MDK's core business operations grew strongly, driven by strong domestic demand and sound business planning and execution, of which the Group‟s share is RM 5.8 million

- Profit before tax for the current quarter is RM19.3 million, an increase of 113% compared to RM9.1 million in the previous quarter. This is attributed mainly to the Group's recognition of non-recurring income of RM 10.1 million from its investment in MDK

- Estimate next 4Q eps after 2010 Q4 result announced = 0.08*4*1.05 = 0.336(exclude non-recurring income RM10.1 million), estimate PE on current price 2.7 = 7.65(DPS 0.13)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0771*4*1.05 = 0.3238, estimate highest/lowest PE = 8.18/7.38 (DPS 0.08)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.1334*2*1.1 = 0.2935 (0.1334 is recent 2Q cum_eps, 10% increase), estimate highest/lowest PE = 8.7/7.85 (DPS 0.076)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.32 (add 5% adjustment from 0.3048 due to profit boosted), estimate highest/lowest PE = 10.48/8.41 (DPS 0.0975)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.3048 (10% grow from 0.2771(after deducted 3.4 mil)), estimate highest/lowest PE = 10.74/6.18 (DPS 0.1975)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.2385, estimate highest/lowest PE = 8.82/7.26 (DPS 0.0975)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.2365, estimate highest/lowest PE = 7.83/6.44 (DPS 0.0975)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.2312, estimate highest/lowest PE = 6.64/5.47 (DPS 0.095)
- Estimate next 4Q eps after 2008 Q4 result announced = 0.2168, estimate highest/lowest PE = 6.11/4.59 (DPS 0.095)

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