KLCI Stock - KENCANA / 5122 - 2011 Quarter 2

Company Info

Market Capital (Capital Size)	5,053,080,408 (Very Large)
Par Value	RM 0.10

My Analysis

Forecast P/E now	(2.75-0.0050)/0.1298 = 21.15 (High)
Target Price	2.73+0.0050 = 2.73 (PE 21.0, EPS 0.1298, DPS 0.0050)
Decision	Not buy unless price below 2.6
Comment	Revenue increased 4.6% and is highest since FY08Q3(higher than preceding year corresponding quarter 40.9%), eps decreased 12.1% but higher than preceding year corresponding quarter 38.7%, cash generated from operating not enough to cover investing expenses hence generated cash from financing activities, stronger liquidity ratio but still at weak level now, higher gearing ratio at high level now, payables turnover period still long time
First Support Price	2.6
Second Support Price	2.45
Risk Rating	MODERATE

Research House

Maybank Target Price	3.1 (2011-01-06)
Affin Target Price	3.21 (2011-01-27)
TA Target Price	3.7 (2011-03-18)
CIMB Target Price	3.4 (2011-03-30)
RHB Target Price	3.5 (2011-03-30)
AMMB Target Price	3.4 (2011-04-27)
MIDF Target Price	3.16 (2011-05-16)
OSK Target Price	3.17 (2011-05-16)

Accounting Ratio

Return on Equity	21.83%
Dividend Yield	0.18%
Profit Margin	17.59%
Tax Rate	18.36%
Asset Turnover	0.6992
Net Asset Value Per Share	0.47
Net Tangible Asset per share	0.45
Price/Net Tangible Asset Per Share	5.64
Cash Per Share	0.17
Liquidity Current Ratio	0.9174
Liquidity Quick Ratio	0.8823
Liquidity Cash Ratio	0.4372
Gearing Debt to Equity Ratio	1.0734
Gearing Debt to Asset Ratio	0.5172
Working capital per thousand Ringgit sale	-4.8%
Days to sell the inventory	9
Days to collect the receivables	93
Days to pay the payables	171

My notes based on 2011 quarter 2 report (number in '000):-
- Higher revenue and pbt mainly due to progress achieved for contracts in hand and better management of relevant costs as well as contribution from drilling services

- The decrease in profit before tax for the current quarter was mainly due to higher contract costs

- Estimate next 4Q eps after 2010 Q2 result announced = (0.0314+0.0276)*2*1.1 = 0.1298, estimate PE on current price 2.75 = 21.15(DPS 0.005)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.0563*2*1.1 = 0.1239, estimate highest/lowest PE = 23.85/17.39 (DPS 0.005)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.0249*4*1.1 = 0.1096, estimate highest/lowest PE = 20.39/14.92 (DPS 0.005)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0191*4 = 0.0764, estimate highest/lowest PE = 22.19/18.26 (DPS 0.005)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.02*4 = 0.08, estimate highest/lowest PE = 20.94/15.69 (DPS 0.005)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.0339*4 = 0.1356, estimate highest/lowest PE = 18.47/9.92 (DPS 0.005)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.1307, estimate highest/lowest PE = 19.09/16.03 (DPS 0.005)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.0324*4 = 0.1296, estimate highest/lowest PE = 17.32/12.77 (DPS 0.005)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.0301*4 = 0.1204, estimate highest/lowest PE = 16.07/9.34 (DPS 0.005)

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