KLCI Stock - FAVCO / 7229 - 2011 Quarter 3

Company Info

Market Capital (Capital Size)	218,583,764 (Small)
Par Value	RM 0.50

My Analysis

Forecast P/E now	(1.22-0.05)/0.1638 = 7.14 (Moderate)
Target Price	1.31+0.05 = 1.36 (PE 8.0, EPS 0.1638, DPS 0.05)
Decision	BUY if MACD back to uptrend and got strong buying volume than selling
Comment	Revenue decreased 1.4% and also lower than preceding year corresponding quarter 7.2%, eps increased 91.2% and was second consecutive quarter increasing and also higher than preceding year corresponding quarter 69.2%, cash generated from operating is more than enough to cover financing expenses but still spent 8.2% of Group cash to cover investing expenses, slightly better liquidity ratio at low level now, slightly lower gearing ratio at very high level now, all accounting ratio also high, higher inventory can indicate better demand of Group products
First Support Price	1.15
Second Support Price	1.05
Risk Rating	MODERATE

Research House

CIMB Target Price

1.23 (2011-11-24)

Accounting Ratio

Return on Equity	17.78%
Dividend Yield	4.10%
Profit Margin	14.38%
Tax Rate	0.64%
Asset Turnover	0.5993
Net Asset Value Per Share	1.22
Net Tangible Asset per share	1.17
Price/Net Tangible Asset Per Share	1.02
Cash Per Share	0.46
Liquidity Current Ratio	1.2356
Liquidity Quick Ratio	0.5941
Liquidity Cash Ratio	0.1852
Gearing Debt to Equity Ratio	2.1031
Gearing Debt to Asset Ratio	0.6777
Working capital per thousand Ringgit sale	26.0%
Days to sell the inventory	286
Days to collect the receivables	273
Days to pay the payables	220

Technical Analysis

SMA 20	1.236 (Downtrend 3 days)
SMA 50	1.185 (Uptrend)
SMA 100	1.12 (Downtrend)
SMA 200	1.196 (Uptrend)
MACD	0.033499 (Downtrend 6 days)
MACD Histogram	-0.004785 (Downtrend 3 days)

My notes based on 2011 quarter 3 report (number in '000):-
- Higher pbt mainly contributed by improvement in margin from sales of goods

- As at 16 November 2011, outstanding order book of the Group is RM609 million

- Estimate next 4Q eps after 2011 Q3 result announced = 0.2047*0.8 = 0.1638, estimate PE on current price 1.22 = 7.14(DPS 0.05)
- Estimate next 4Q eps after 2011 Q2 result announced = 0.0955*1.2 = 0.1146, estimate highest/lowest PE = 11.08/6.94 (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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