KLCI Stock - HAIO / 7668 - 2011 Quarter 4

Company Info

Market Capital (Capital Size)	436,731,009 (Small)
Par Value	RM 0.50

My Analysis

Forecast P/E now	(2.16-0.075)/0.1567 = 13.31 (High)
Target Price	1.41+0.075 = 1.49 (PE 9.0, EPS 0.1567, DPS 0.075)
Decision	Not interested unless revenue and profit increase more
Comment	Revenue increased 0.9% and is second consecutive quarter increasing but still lower than preceding year corresponding quarter 41.2%, eps increased 34.6% and is second consecutive quarter increasing but stilllower than preceding year corresponding quarter 38.7%, cash generated from operating not enough to cover dividend and other expenses, stronger liquidity ratio at strong level now, lower gearing ratio at below moderate level now, all accounting ratio are good, MLM division recovering
First Support Price	2.07
Second Support Price	1.8
Risk Rating	HIGH

Research House

OSK Target Price	1.93 (2011-03-24)
RHB Target Price	1.35 (2011-03-24)

Accounting Ratio

Return on Equity	13.51%
Dividend Yield	3.47%
Profit Margin	21.48%
Tax Rate	28.09%
Asset Turnover	0.8666
Net Asset Value Per Share	1.03
Net Tangible Asset per share	1.03
Price/Net Tangible Asset Per Share	2.1
Cash Per Share	0.41
Liquidity Current Ratio	4.4159
Liquidity Quick Ratio	3.0892
Liquidity Cash Ratio	2.4453
Gearing Debt to Equity Ratio	0.2151
Gearing Debt to Asset Ratio	0.1713
Working capital per thousand Ringgit sale	51.1%
Days to sell the inventory	87
Days to collect the receivables	35
Days to pay the payables	44

My notes based on 2011 quarter 4 report (number in '000):-
- The higher revenue contributed by the wholesale and retail divisions in the current financial year has been offset by the larger drop in revenue from its principal subsidiary, the MLM division. During the financial year, the MLM division has gone through a struggling year to realign its business strategies and to restructure its distributor‟s network, which is beginning to see positive results

- The recovery of MLM division in the fourth quarter was the main reason to the increase in the Group‟s revenue and pre-tax profit. The MLM division has been emphasizing heavily in motivation and product training programs. The trip incentive campaign has successfully attracted a wider group of lower level core distributors which had contributed higher revenue to the MLM division

- The recent revision in the interest and utilities rate, coupled with the subsidy reduction program implemented by the Malaysian government will have negative impact on domestic consumer spending and increase the business operating costs

- Estimate next 4Q eps after 2011 Q4 result announced = (0.0428+0.0318)*2*1.05 = 0.1567, estimate PE on current price 2.16 = 13.31(DPS 0.075)
- Estimate next 4Q eps after 2011 Q3 result announced = 0.0318*4*1.05 = 0.1336, estimate highest/lowest PE = 17.33/14.93 (DPS 0.075)
- Estimate next 4Q eps after 2011 Q2 result announced = 0.0307*4*0.95 = 0.1167, estimate highest/lowest PE = 23.91/18.25 (DPS 0.1)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.0391*4 = 0.1564, estimate highest/lowest PE = 20.01/17.46 (DPS 0.12)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.0714*4 = 0.2856*1.1(10% QbQ improvement adjustment) = 0.3142, estimate highest/lowest PE = 12.16/8.78 (DPS 0.2)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.3729, estimate highest/lowest PE = 12.42/9.17 (DPS 0.18)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.2424*4 = 0.9696, estimate highest/lowest PE = 10.78/7.44(DPS 0.42)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.2217*4 = 0.8868, estimate highest/lowest PE = 8.54/6.33 (DPS 0.42)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.1778*4 = 0.7112, estimate highest/lowest PE = 7.44/5.76 (DPS 0.4)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.1463*4 = 0.5852, estimate highest/lowest PE = 6.9/5.06 (DPS 0.4)

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