KLCI Stock - PWROOT / 7237 - 2011 Quarter 3

Company Info

Market Capital (Capital Size)	163,500,000 (Small)
Par Value	RM 0.20

My Analysis

Forecast P/E now	(0.545-0.08)/0.0397 = 11.71 (High)
Target Price	0.24+0.08 = 0.32 (PE 6.0, EPS 0.0397, DPS 0.08)
Decision	NOT BUY unless revenue and profit stabilize high
Comment	Revenue decreased 22.3% but higher than preceding year corresponding quarter 11.4%, eps second consecutive quarter decreasing and was 71.4% lower than preceding quarter and also lower than preceding year corresponding quarter 64.5%, positive free cash flow decreasing, negative net cash flow increased, liquidity ratio decreasing but still at high level now, low gearing ratio, high payables period, inventory and receivables at moderate level and still acceptable compared to previous quarters, raw material cost increased
First Support Price	0.56
Second Support Price	0.56
Risk Rating	HIGH

Research House

JF Apex Target Price

0.61 (2011-01-26)

Accounting Ratio

Return on Equity	4.52%
Dividend Yield	14.68%
Profit Margin	2.39%
Tax Rate	-
Asset Turnover	0.7305
Net Asset Value Per Share	0.65
Net Tangible Asset per share	0.63
Price/Net Tangible Asset Per Share	1.04
Cash Per Share	0.17
Liquidity Current Ratio	3.672
Liquidity Quick Ratio	3.0069
Liquidity Cash Ratio	1.2282
Gearing Debt to Equity Ratio	0.2293
Gearing Debt to Asset Ratio	0.1865
Working capital per thousand Ringgit sale	62.7%
Days to sell the inventory	170
Days to collect the receivables	138
Days to pay the payables	231

My notes based on 2011 quarter 3 report (number in '000):-
- The Group recorded revenue of RM38.7 million for the third quarter ended 30 November 2010, representing an increase of RM4 million or 11.4% when compared to the previous year's corresponding quarter. This increase is largely attributable to the increase in the sales from the Group's Fast Moving Consumer Goods business in both domestic market and oversea market

- The Group recorded a profit before tax of RM1.1 million for the current quarter which is a decrease of approximately RM2.1 million compared to the previous year's corresponding quarter of PAT of RM3.2 million. The reasons for the decrease in profit as compared to the previous year's corresponding quarter is mainly due to the higher level of marketing and promotional activities undertaken in the current quarter in the local market as well as overseas to expand and extend our product reach and penetration

- The Group showed a decrease of RM11.1 million or 22.3% in revenue in revenue for the current quarter compared to the revenue recorded for the immediate preceding quarter ended 31 August 2010 of RM49.8 million. This decrease is mainly attributable to the decrease in the sales from domestic market

- The Group's profit before tax of RM1.1 million for the current quarter represents a decrease of RM2.9 million when compared to the profit after tax of RM4 million for the immediate preceding quarter ended 31 August 2010 due to the decrease in sales

- Estimate next 4Q eps after 2011 Q3 result announced = (0.0323+0.0038)*1.1 = 0.0397, estimate PE on current price 0.545 = 11.71(DPS 0.08)
- Estimate next 4Q eps after 2011 Q2 result announced = 0.0285*2*0.95 = 0.0542, estimate highest/lowest PE = 13.56/8.67 (DPS 0.08)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.0338*1.1 = 0.0372(10% increase from 0.0338), estimate highest/lowest PE = 18.55/13.98 (DPS 0.04)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.0338(follow 2010 cumulative eps), estimate highest/lowest PE = 16.57/13.46 (DPS 0.04)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.04, estimate highest/lowest PE = 14.25/11.13 (DPS 0.04)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.0395, estimate highest/lowest PE = 14.68/12.03 (DPS 0.04)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.034, estimate highest/lowest PE = 17.94/12.35 (DPS 0.03)

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