KLCI Stock - CSCSTEL / 5094 - 2010 Quarter 4

Company Info

Market Capital (Capital Size)	653,600,000 (Medium)
Par Value	RM 1.00

My Analysis

Forecast P/E now	(1.72-0.13)/0.1483 = 10.72 (High)
Target Price	1.48+0.14 = 1.61 (PE 10.0, EPS 0.1483, DPS 0.13)
Decision	Not interested unless revenue and profit increase more
Comment	Revenue increased 34.3% but lower than preceding year corresponding quarter 5.5%, eps increased from loss but still largely lower than preceding year corresponding quarter, positive free cash flow decreased and negative net cash flow increased, very strong liquidity ratio, low gearing ratio, all accounting periods are good
First Support Price	1.7
Second Support Price	1.6
Risk Rating	HIGH

Research House

RHB Target Price	2.12 (2010-12-27)
OSK Target Price	1.97 (2011-02-18)

Accounting Ratio

Return on Equity	8.75%
Dividend Yield	7.56%
Profit Margin	4.32%
Tax Rate	23.50%
Asset Turnover	1.1654
Net Asset Value Per Share	2.12
Net Tangible Asset per share	2.12
Price/Net Tangible Asset Per Share	0.83
Cash Per Share	0.78
Liquidity Current Ratio	10.3505
Liquidity Quick Ratio	7.2169
Liquidity Cash Ratio	5.1749
Gearing Debt to Equity Ratio	0.1229
Gearing Debt to Asset Ratio	0.1094
Working capital per thousand Ringgit sale	50.8%
Days to sell the inventory	71
Days to collect the receivables	41
Days to pay the payables	23

My notes based on 2010 quarter 4 report (number in '000):-
- The Group achieved revenue and profit before tax for the current quarter of RM258.7 million and RM11.2 million respectively. This represents a decrease of RM15.0 million or 6% lower in revenue than that of its corresponding quarter. Profit before tax decrease significantly by RM31.8 million or 74% from RM43.0 million in the corresponding quarter

- The drop in revenue and profit before tax are due to lower selling prices and higher raw material costs even though sales volume is marginally higher than that of corresponding quarter

- The Group’s revenue has increased by 34%, from RM192.7 million in the preceding quarter to RM258.7 million in this quarter. The increase in revenue is due to increase in sales volume of our steel products albeit at lower selling prices

- The increase in revenue together with lower raw materials cost resulted in Group’s profit before tax to increase significantly by 369% from RM2.4 million in the preceding quarter to RM11.2 million this quarter

- Estimate next 4Q eps after 2010 Q3 result announced = 0.1854*0.8 = 0.1483, estimate PE on current price 1.72 = 10.72(DPS 0.13)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.18*0.9 = 0.162, estimate highest/lowest PE = 10.19/9.57 (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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