KLCI Stock - AMWAY / 6351 - 2011 Quarter 2

Company Info

Market Capital (Capital Size)	1,502,484,795 (Large)
Par Value	RM 1.00

My Analysis

Forecast P/E now	(9.14-0.62)/0.4739 = 17.98 (High)
Target Price	7.58+0.62 = 8.20 (PE 16.0, EPS 0.4739, DPS 0.62)
Decision	Not interested unless revenue and profit increase more
Comment	Revenue decreased 2.1% and was third consecutive quarter decreasing but still higher than preceding year corresponding quarter 0.5%, eps decreased 6.2% and also lower than preceding year corresponding quarter 12.4%, cash generated from operating is more than enough to cover all expenses, weaker liquidity ratio at low level now, higher gearing ratio at moderate level now, all accounting ratio are good, continue benefit from weakeaning of USD, affect by weakening of consumer spending
First Support Price	9.0
Second Support Price	8.5
Risk Rating	MODERATE

Research House

RHB Target Price	10.23 (2011-02-17)
OSK Target Price	9.86 (2011-08-11)

Accounting Ratio

Return on Equity	34.88%
Dividend Yield	7.22%
Profit Margin	15.16%
Tax Rate	25.86%
Asset Turnover	2.0764
Net Asset Value Per Share	1.34
Net Tangible Asset per share	1.31
Price/Net Tangible Asset Per Share	6.87
Cash Per Share	1.06
Liquidity Current Ratio	1.9444
Liquidity Quick Ratio	1.4859
Liquidity Cash Ratio	1.3871
Gearing Debt to Equity Ratio	0.567
Gearing Debt to Asset Ratio	0.3618
Working capital per thousand Ringgit sale	16.5%
Days to sell the inventory	36
Days to collect the receivables	6
Days to pay the payables	74

My notes based on 2011 quarter 2 report (number in '000):-
- Lower six month revenue than year 2010 due to weaker consumer spending arising from firming inflationary expectation

- Lower pbt mainly due to higher advertising and promotional expenses coupled with higher operating cost arising from investment in consumer access driven strategies

- Estimate next 4Q eps after 2011 Q2 result announced = 0.4988*0.95 = 0.4739, estimate PE on current price 9.14 = 17.98(DPS 0.62)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.5142*0.97 = 0.4988, estimate highest/lowest PE = 18.4/16.32 (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)

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