KLCI Stock - AMWAY / 6351 - 2011 Quarter 1

Company Info

Market Capital (Capital Size)	1,602,760,038 (Large)
Par Value	RM 1.00

My Analysis

Forecast P/E now	(9.75-0.66)/0.4988 = 18.22 (High)
Target Price	7.98+0.66 = 8.64 (PE 16.0, EPS 0.4988, DPS 0.66)
Decision	Not interested unless revenue and profit increase more
Comment	Revenue decreased 6.2% and is second consecutive quarter decreasing and also lower than preceding year corresponding quarter 1.6%, eps increased 10.7% and also higher than preceding year corresponding quarter 21.1%, cash generated from operating is more than enough to cover all expenses, stronger liquidity ratio but still at low level now, higher gearing ratio at moderate level now, all accounting periods are good, continue to benefit from weak USD, weakened consumer sentiment
First Support Price	9.0
Second Support Price	8.5
Risk Rating	MODERATE

Research House

OSK Target Price	11.05 (2011-02-17)
RHB Target Price	10.23 (2011-02-17)

Accounting Ratio

Return on Equity	35.12%
Dividend Yield	6.77%
Profit Margin	15.84%
Tax Rate	25.92%
Asset Turnover	2.1596
Net Asset Value Per Share	1.32
Net Tangible Asset per share	1.29
Price/Net Tangible Asset Per Share	7.54
Cash Per Share	1.03
Liquidity Current Ratio	1.9964
Liquidity Quick Ratio	1.5631
Liquidity Cash Ratio	1.4704
Gearing Debt to Equity Ratio	0.5341
Gearing Debt to Asset Ratio	0.3482
Working capital per thousand Ringgit sale	16.1%
Days to sell the inventory	32
Days to collect the receivables	5
Days to pay the payables	71

My notes based on 2011 quarter 1 report (number in '000):-
- The decrease in sales revenue was mainly due to weaker consumer spending arising from firming
inflationary expectation coupled with the sales of corresponding period was boosted by pre-price increase buying ahead of the distributor price increase effective 1 March 2010

- Despite the marginally lower sales revenue, the Group’s profit before tax increased by 22.4% for the quarter under review as compared to the corresponding period in the preceding year mainly due to the favorable foreign exchange impact on purchase of imported products

- The Group’s sales revenue decreased by 6.2% as compared to the preceding quarter mainly due to higher distributor productivity driven by enhanced sales and marketing program implemented in the preceding quarter

- Estimate next 4Q eps after 2011 Q1 result announced = 0.5142*0.97 = 0.4988, estimate PE on current price 9.75 = 18.22(DPS 0.66)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.4761*1.08 = 0.5142, estimate highest/lowest PE = 17.64/14.86 (DPS 0.66)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.3335+(0.1246*1.2) = 0.5497, estimate highest/lowest PE = 15.21/13.46 (DPS 0.64)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.3335+(0.1246*1.2) = 0.5497, estimate highest/lowest PE = 14.04/13.43 (DPS 0.52)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.3261+(0.099*1.1) = 0.4676(Correction to preceding Q estimated), estimate highest/lowest PE = 16.3/14.71 (DPS 0.5)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.0996*4 = 0.3984, estimate highest/lowest PE = 17.62/16.99 (DPS 0.48)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.1246*4 = 0.4984, estimate highest/lowest PE = 13.98/13.46 (DPS 0.48)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.099*4 = 0.396, estimate highest/lowest PE = 17.6/16.92 (DPS 0.5)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.118*4 = 0.472, estimate highest/lowest PE = 14.79/13.73 (DPS 0.52)
- Estimate next 4Q eps after 2008 Q4 result announced = 0.1332*4 = 0.5328, estimate highest/lowest PE = 13.06/11.75 (DPS 0.54)

AMWAY latest news (English)

AMWAY latest news (Chinese)

USD/MYR foreign exchange chart