KLCI Stock - KNM / 7164 - 2012 Quarter 2

Company Info 

Market Capital (Capital Size)	700,764,815 (Medium)
Par Value	RM 1.00

My Analysis 

Forecast P/E now	0.7/0.1348 = 5.19 (Moderate)
Target Price	Above SMA 100
Decision	Short term BUY if stock price can sustain above SMA50 and got very strong buy volume
Comment	Revenue increased 0.1% and was third consecutive quarter increasing and also higher than preceding year corresponding quarter 7.8%, eps decreased 3.4% but higher than preceding year corresponding quarter 211.7%, no cash generated from any of cash flow hence spent 60% of Group cash to cover all expenses, slightly better margin but still low, liquidity ratio still indicate very weak financial ratio, although gearing ratio got improved but still indicate weak financial leverage, all accounting of collection or repayment period still as asual acceptable, all segment turned positive
First Support Price	0.67
Second Support Price	0.63
Risk Rating	HIGH

Research House

OSK Target Price	0.8 (2012-05-23)
AMMB Target Price	0.55 (2012-08-17)
HwangDBS Target Price	0.7 (2012-08-17)
Jupiter Target Price	0.79 (2012-08-17)
Kenanga Target Price	0.73 (2012-08-17)
Maybank Target Price	0.88 (2012-08-17)
MIDF Target Price	0.56 (2012-08-17)
RHB Target Price	0.74 (2012-08-17)
TA Target Price	1.11 (2012-08-17)

Accounting Ratio 

Return on Equity	-2.28%
Dividend Yield	-
Gross Profit Margin	0.00%
Operating Profit Margin	5.92%
Net Profit Margin	3.71%
Tax Rate	-
Asset Turnover	0.575
Net Asset Value Per Share	1.68
Net Tangible Asset per share	0.3
Price/Net Tangible Asset Per Share	2.35
Cash Per Share	0.18
Liquidity Current Ratio	0.8445
Liquidity Quick Ratio	0.4212
Liquidity Cash Ratio	0.107
Gearing Debt to Equity Ratio	1.3248
Gearing Debt to Asset Ratio	0.5687
Working capital per thousand Ringgit sale	-11.7%
Days to sell the inventory	113
Days to collect the receivables	190
Days to pay the payables	140

Technical Analysis 

SMA 10	0.64 (Uptrend)
SMA 20	0.629 (Uptrend 5 days)
SMA 50	0.672 (Same)
SMA 100	0.733 (Downtrend)
SMA 200	0.877 (Downtrend)
MACD (26d/12d)	0.004543 ( 0.003952 )
Signal (9)	-0.010675 ( 0.003804 )
MACD Histogram	0.015218 (Bullish trend 5 days)
Bolinger Upper Band	0.744
Bolinger Lower Band	0.514

My notes based on 2012 quarter 2 report (number in '000):-
- Higher revenue and pbt due to higher job recognition on stronger order book and better contribution margin from projects

- Asia & Oceanic Segment saw improvement on contribution from higher margin projects’ progress. Market competition on conventional low end process equipment in 2012 eased with higher order secured

- Europe Segment continue to operate with the strong order book from last year complimented with new orders secured in the current year. Profitability improved on higher project revenue recognition and better contribution margin

- Americas Segment continue to weigh down on the Americas performance, extending losses on the back of slowdown of order book as compared to the previous year. However, North America continue to contribute positively on progress of Canadian oil sands projects

- Estimate next 4Q eps after 2012 Q1 result announced = 1648151*0.08/977845 = 0.1348, estimate PE on current price 0.7 = 5.19
- Estimate next 4Q eps after 2012 Q1 result announced = 1625722*0.08/977848 = 0.133, estimate highest/lowest PE = 5.86/4.21
- No estimate next 4Q eps after 2011 Q4 result announced due to loss
- No estimate next 4Q eps after 2011 Q3 result announced due to loss
- Estimate next 4Q eps after 2011 Q2 result announced = 0.0889*0.9 = 0.08, estimate highest/lowest PE = 18.63/13.75(DPS 0.02)
- Estimate next 4Q eps after 2011 Q1 result announced = (0.0194+0.021)*2*1.1 = 0.0889, estimate highest/lowest PE = 16.65/12.26 (DPS 0.02)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.0655*2*1.1 = 0.1441, estimate highest/lowest PE = 20.12/15.68 (DPS 0.03)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0089*4*1.2 = 0.0427(use VAT 15%, include incoming new contract), estimate highest/lowest PE = 15.36/10.54
- No estimate for next 4Q eps after 2010 Q2 result announced
- No estimate for next 4Q eps after 2010 Q1 result announced
- No estimate for next 4Q eps after 2009 Q4 result announced
- Estimate next 4Q eps after 2009 Q3 result announced = 0.0081*4 = 0.0324, estimate highest/lowest PE = 11.67/9.39 (DPS 0.015)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.0181*4 = 0.0724, estimate highest/lowest PE = 11.67/9.39 (DPS 0.015)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.0250*4 = 0.1, estimate highest/lowest PE = 10.45/7
- Estimate next 4Q eps after 2008 Q4 result announced = 0.0214*4 = 0.0856, estimate highest/lowest PE = 9.7/3.56 (DPS 0.015)

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