KLCI Stock - BAT / 4162 - 2011 Quarter 2

Company Info

Market Capital (Capital Size)	13,277,145,000 (Very Large)
Par Value	RM 0.50

My Analysis

Forecast P/E now	(46.5-2.7)/2.5406 = 17.24 (High)
Target Price	43.19+2.7 = 45.89 (PE 17.0, EPS 2.5406, DPS 2.7)
Decision	Not interested unless price below 45
Comment	Revenue increased 5.2% and is second consecutive quarter increasing and also higher than preceding year corresponding quarter 5%, eps increased 3.1% but lower than preceding year corresponding quarter 0.9%, cash generated from operating enough to cover all expenses, weaker liquidity ratio at low level now, higher gearing ratio at very high level now, all accounting ratio are good
First Support Price	45.66
Second Support Price	44.4
Risk Rating	MODERATE

Research House

AMMB Target Price	45.9 (2011-02-23)
ECM Target Price	43.8 (2011-02-23)
Maybank Target Price	42.5 (2011-02-23)
Kenanga Target Price	42.2 (2011-04-22)
MIDF Target Price	44.84 (2011-04-22)
RHB Target Price	43.15 (2011-04-22)
CIMB Target Price	42 (2011-07-22)
OSK Target Price	43.41 (2011-07-22)

Accounting Ratio

Return on Equity	144.36%
Dividend Yield	5.96%
Profit Margin	23.75%
Tax Rate	25.69%
Asset Turnover	2.4257
Net Asset Value Per Share	1.76
Net Tangible Asset per share	0.32
Price/Net Tangible Asset Per Share	144.37
Cash Per Share	1.45
Liquidity Current Ratio	1.8468
Liquidity Quick Ratio	1.3451
Liquidity Cash Ratio	0.929
Gearing Debt to Equity Ratio	2.2662
Gearing Debt to Asset Ratio	0.6938
Working capital per thousand Ringgit sale	9.5%
Days to sell the inventory	27
Days to collect the receivables	17
Days to pay the payables	41

My notes based on 2011 quarter 2 report (number in '000):-
- Higher revenue than FY10Q2 due to the ban of packs less than 20 sticks in June last year, down trading pressure from excise led price increase in October 2010, and from certain sub-value for money brands selling below the mandatory minimum price

- Stronger enforcement efforts by the authorities and heightened public awareness have helped reduce the illegal sale of cigarettes below minimum price

- Lower pbt than FY10Q2 due to lower volumes and loss of 14’s pack size margin, partially offset by higher net pricing and productivity savings

- Higher revenue than FY11Q1 due to the strong performance of Dunhill through its new product launches, Dunhill Boost and Switch and enforcement efforts by the authorities in penalising errant traders selling below minimum price

- Higher pbt than FY11Q1 due to higher volumes, partially offset by increased operating expenses from timing of overhead spend

- Estimate next 4Q eps after 2011 Q2 result announced = 1.2703*2 = 2.5406, estimate PE on current price 46.5 = 17.24(DPS 2.7)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.6254*4 = 2.5016, estimate highest/lowest PE = 18.43/17.2 (DPS 2.4)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.5977*4*0.95 = 2.2713, estimate highest/lowest PE = 20.36/18.67 (DPS 2.41)
- Estimate next 4Q eps after 2010 Q2 result announced = 2.4323(7% drop from 2.6154), estimate highest/lowest PE = 19.56/16.8 (DPS 2.36)
- Estimate next 4Q eps after 2010 Q1 result announced = 2.4323(7% drop from 2.6154), estimate highest/lowest PE = 17.53/16.31 (DPS 2.36)
- Estimate next 4Q eps after 2009 Q4 result announced = 2.4323, estimate highest/lowest PE = 17.82/16.06 (DPS 2.36)
- Estimate next 4Q eps after 2009 Q3 result announced = 2.4323, estimate highest/lowest PE = 17.99/16.1 (DPS 2.35)
- Estimate next 4Q eps after 2009 Q2 result announced = 2.8448, estimate highest/lowest PE = 16.36/14.54 (DPS 2.65)

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