KLCI Stock - FAVCO / 7229 - 2011 Quarter 2

Company Info

Market Capital (Capital Size)	174,687,844 (Small)
Par Value	RM 0.50

My Analysis

Forecast P/E now	(0.975-0.05)/0.1146 = 8.07 (High)
Target Price	0.92+0.05 = 0.97 (PE 8.0, EPS 0.1146, DPS 0.05)
Decision	Not interested unless stock price got uptrend signal
Comment	Revenue increased 29% and also higher than preceding year corresponding quarter 17.9%, eps increased 108.3% and also higher than preceding year corresponding quarter 31% (however got high other income), cash generated from operating is more than enough to cover all expenses, slightly weaker liquidity ratio at low level now, slightly higher gearing ratio at very high level now, all accounting ratio also high
First Support Price	0.95
Second Support Price	0.88
Risk Rating	MODERATE

Accounting Ratio

Return on Equity	15.74%
Dividend Yield	5.13%
Profit Margin	8.31%
Tax Rate	11.95%
Asset Turnover	0.6197
Net Asset Value Per Share	1.19
Net Tangible Asset per share	1.15
Price/Net Tangible Asset Per Share	1.01
Cash Per Share	0.57
Liquidity Current Ratio	1.2249
Liquidity Quick Ratio	0.6133
Liquidity Cash Ratio	0.2298
Gearing Debt to Equity Ratio	2.1445
Gearing Debt to Asset Ratio	0.682
Working capital per thousand Ringgit sale	24.1%
Days to sell the inventory	260
Days to collect the receivables	255
Days to pay the payables	200

My notes based on 2011 quarter 2 report (number in '000):-
- Higher revenue and pbt mainly due to increase in sales

- As at 18 August 2011, outstanding order book of the Group is RM675.3 million of which majority is from oil and gas cranes for the offshore oil and gas exploration and production activities. Remaining are from the shipyard, construction and wind turbine industry

- Estimate next 4Q eps after 2011 Q2 result announced = 0.0955*1.2 = 0.1146, estimate PE on current price 0.975 = 8.07(DPS 0.05)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.0217*4*1.1 = 0.0955(lower down estimate due to previous high profit was from other income), estimate highest/lowest PE = 18.43/10.99 (DPS 0.05)
- Estimate next 4Q eps after 2011 Q3 result announced = 0.1362, estimate highest/lowest PE = 10.5/7.05 (DPS 0.04)
- Estimate next 4Q eps after 2011 Q2 result announced = 0.1602*0.85 = 0.1362(450 million equal to 15% decrease from 2009 Q4 cum_eps), estimate highest/lowest PE = 8.37/5.58 (DPS 0.04)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.1442*0.7 = 0.1009 (30% drop from 0.1442, revenue drop and margin expect will not increase much), estimate highest/lowest PE = 8.42/7.04 (DPS 0.04)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.1442(10% drop from 0.1602, revenue drop and margin expect will not increase much), estimate highest/lowest PE = 6.93/4.92 (DPS 0.04)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.1442, estimate highest/lowest PE = 5.76/4.99 (DPS 0.025)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.1442, estimate highest/lowest PE = 6.45/5.49 (DPS 0.025)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.1442, estimate highest/lowest PE = 8.11/5.72 (DPS 0.025)

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