KLCI Stock - XINQUAN / 5155 - 2011 Quarter 4

Company Info

Market Capital (Capital Size)	302,720,050 (Small)
Par Value	USD 0.10

My Analysis

Forecast P/E now	0.985/0.4037 = 2.44 (Moderate)
Target Price	0.4037*4.5 = 1.82 (PE 4.5, EPS 0.4037)
Decision	BUY if stock price at beginning of next uptrend is above 0.95
Comment	Revenue increased 2.6% and also higher than preceding year corresponding quarter 35%, eps increased 46.5% and was second consecutive quarter increasing and also higher than preceding year corresponding quarter 117.2%, cash generated from operating not enough for financing expenses due to largely increased receivables hence increased borrowings and spent 22% of Group cash to cover other expenses, stronger liquidity ratio at strong level now, lower gearing ratio at low level now, all accounting ratio are good
First Support Price	0.95
Second Support Price	0.88
Risk Rating	MODERATE

Research House

Mercury Target Price

1.61 (2011-08-29)

Accounting Ratio

Return on Equity	26.10%
Dividend Yield	-
Profit Margin	23.91%
Tax Rate	4.24%
Asset Turnover	1.3128
Net Asset Value Per Share	1.47
Net Tangible Asset per share	1.47
Price/Net Tangible Asset Per Share	0.67
Cash Per Share	0.7
Liquidity Current Ratio	4.5963
Liquidity Quick Ratio	4.3279
Liquidity Cash Ratio	2.431
Gearing Debt to Equity Ratio	0.1985
Gearing Debt to Asset Ratio	0.1656
Working capital per thousand Ringgit sale	44.5%
Days to sell the inventory	17
Days to collect the receivables	86
Days to pay the payables	39

My notes based on 2011 quarter 4 report (number in '000):
- Higher revenue and profit mainly due to increase in sales volume of shoe sole and apparel from approximately 12.5 million pairs and 5.6 million pieces respectively in FY2010 to approximately 16.8 million pairs and 5.8 million pieces respectively in FY2011, increase in average selling price of shoe from RMB95.5 per pair in FY2010 to RMB106.2 per pair in FY2011 and increase in average selling price of apparels from RMB66.7 per piece in FY2010 to RMB90.3 per pieces in FY2011

- The substantial increase in the selling price of apparels is due to the successful brand upgrade to GERTOP which is in the outdoor casual wear compared to the previous outdoor sports wear

- Estimate next 4Q eps after 2011 Q4 result announced = 0.3845*1.05*0.8696 = 0.3511(adjustment of issue new securities), estimate PE on current price 0.985 = 2.44
- Estimate next 4Q eps after 2011 Q3 result announced = 0.3154*1.1 = 0.3469, estimate highest/lowest PE = 3.32/2.31 (DPS 0.05)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.3452*1.1 = 0.3797, estimate highest/lowest PE = 3.56/2.82 (DPS 0.05)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.3452*1.1 = 0.3797, estimate highest/lowest PE = 4.87/3.56 (DPS 0.05)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.095*4 = 0.38(0.095 is average of recent 2Q minus little eps due to end of tax exemption and reduction), estimate highest/lowest PE = 4.93/2.91 (DPS 0.025)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.1584*2*1.1 = 0.3485, estimate highest/lowest PE = 3.77/3 (DPS 0.025)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.0834*4 = 0.3336, estimate highest/lowest PE = 4.2/3.15
- Estimate next 4Q eps after 2009 Q4 result announced = 0.4288, estimate highest/lowest PE = 3.59/3.03

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