KFIMA Profit Remain Steady

Still keeping my Kfima tight, though have sold some at RM1.03 the other day. The 1Q result seem steady eventhough overall profit was drag down by foreign operations due to foregin currency exchange. Revenue increase by 19% from previous corresponding period. Gross profit also jump by 41%. EPS stood at 6.60sen. Just take its rolling 4Q as a forecast for the remaining Q, as this would be quite close to reality and conservative calculation :-

Q2 - 3.75

Q3 - 6.88

Q4 - 4.68

Q1 - 6.60

Total forecast EPS = 21.91sen

Dividend = 5sen

Raise my FV = 6 X 21.91 = RM1.31

Bought More KFIMA

Bought more Kfima at a price of RM0.92 after disposing Genting at RM7.27 the other day. This purchase happen when i manage to salvage some extra money out of the disposal of Genting. I believe there will be more upside for Kfima especially when time draw nearer for its 5sen dividend around August or so. This definitely serve as an attractive catalyst beside the good earnings that they have garner so far.

Low valuation is where making Kfima attractive, with EPS of 22.32sen with just price at RM0.95 currently is some how quite safe to buy in. Of course many good financial figures recently should somehow justified that Kfima would at least trading at PE of 5 and above. I maintain my target price of RM1.10 in short term of 3 months time. We will just have to wait patiently and accumulate more if it dip and we are playing around dividend time which i think is a safe heaven period to buy as the dividend of 5% or more is good enough to serve as a cushion after all.

Again, this of course does not represent a buy call from me. Buy at your own risk.

KFIMA Continue Its Robust Earnings Indeed

KFIMA has just release its 4Q result, giving an EPS of 4.68sen comparing to its corresponding Q of 6.39sen which is about 26% decline but however the total financial year ended 31/3/2010 increased by 27% giving total of an impessive EPS of 22.32sen.

Simple FV calculation :-

PE = 0.89/0.2232 = 3.98sen

FV = 5 x 0.2232 = RM1.11

Have not gone into detail study of its 4Q result, briefly, the revenue increased by over 50% but the profit declined by 26% ??? Something missing someway ?? Will do an update once i got the detail information of its 4Q. No matter how, its total fiscal result is still an impressive one as it registered first time above 20sen per share, which is the highest thus far and the propose 5sen dividend is 2sen higher than previous 3sen, that represent a total increase of 67% in dividend and represent a 5.6%p.a DY, much much higher than FD right ? The dividend payout ratio is only about 22% in which i think is relatively low, hopefully, they might increase the dividend payout ratio in future if the remarkable result is continue to be attained.

Update : Have just gone through the report. The decline in profit for this quarter is due to it income tax expense where they get a deferred tax benefit in prior quarter and a higher tax rate this time round. Other factor could be due to its higher cost of sales by additional 12%.

A More Detail Look At KFIMA

Most of the time we look at figures and neglected the growth prospect of a company but nevertheless this is the most direct and easiest way to look at as it implies the healthiness of a company, because the figure never lie and is the easiest to obtained.

It is worth mentioning KFIMA again when May 2010 is approaching; because it is the time KFIMA will announce it 4th Q result. Presuming the rolling 4 qtrs will sum up to below :-

4Q EPS (03-2009) = 6.43

1Q EPS (06-2009) = 7.01

2Q EPS (09-2009) = 3.75

3Q EPS (12-2009) = 6.88

4Q EPS (03-2010) = ??

We take 4Qs of above and sum up will give a total EPS of 24.07sen. Wow, this is fantastic figure as mentioned in the previous post. Though, we do not know what will turn out in the coming 4Q result but taking it previous 4Q figure is just good enough as everything work out here is based on estimation and forecast. So, this in turn will represent a PE of 4.28sen. One must think it is low enough to spur the price up ? Yes, indeed it does make sense to trade at higher valuation at a minimum of PE 5X at least. Lets study in-depth other figures to substantiate what I said.

1) Dividend

This is what I most concerned as my first criterion is dividend. KFIMA has a tendency of average dividend payout ratio of 17% of net profit. Estimated dividend to be declared this time round is 24.07 x 17% = 4.1sen. This represent a 4.1/1.03 = 3.98 % on current price @ RM1.03. Much higher compare to FD.

2) ROE

Company has to make money to continue it operation. Judging previous figure, a ratio of ROE is around 13.8%, this is a very good margin so to speak, not many companies can meet that.

3) Gearing

In order to stay healthy with comfortable operation cash flow, my own figure of a company gearing should not go beyond 70% of it total asset. KFIMA at this level only stay around 30% debt which is very healthy in my opinion.

Another good figure for KFIMA is, it is in high ability in meeting interest expense where KFIMA has power to service interest expense on debt easily.

The only setback is KFIMA relatively consider under a low cash flow ratio.

4) FV

As usual, my way of FV = 5 x 24.07 = RM1.20. Represent a 20% discount on current price at RM1.03.

Under Value Stocks Under My Radar List

Just briefly list out some of the "undervalue" stocks under my radar board. However only 2 fulfill my criteria, as i always stress that dividend yielding is my main criteria in picking stocks, try see below whether you can spot which one of it is my preference :-

1) EMIVEST
2) KHIND
3) GOPENG
4) KFIMA
5) TOMEI

Of the above, I have not listed one of my pick which recently i have just acquired some the other day. That counter has so far appreciated about 14% since i first pick, i am still in the accumulate stage if it ever drop to my target price.

Back to the above, only KFIMA is in my holding, i have yet to venture into any of the above. Of course, the above picked might not serve as save stocks to invest eventhough it is truely undervalue (under my own term) under current circumtances. Stock market changes everyday, no one can truely assured of anything but being "undervalue" certain risk has be diminished. For example it has steady earnings, good EPS, healthy BS and dividend & etc....

The above just serve as reference, so do not follow blindly as this may not fit into your way of pcking stocks.  Till then happy trading.

KFIMA - Fantastic 3Q result

Kumpulan Fima Berhad. The Group's principal activities are producing and trading security and confidential documents. Other activities include manufacturing and packaging of food products, estate operations and cattle farming, providing bulk handling and storage of liquid products and cargoes, warehousing and transportation and customs for forwarding services and international trading. It is also involved in rental and management of commercial properties and operating as an investment holding company. Operations are carried out in Malaysia, Papua New Guinea and Indonesia.

Fantastic 3Q result coming from Kfima. 9 months net profit 46m increased by 58%. This brings the EPS to 17.65sen (accumulate of 3Q) almost on par with last whole financial year. There is one more quarter to run, would expect a better dividend in the next quarter.

Current PE = 86/17.65 = 4.87sen, excluding the last quarter, assuming rounding the last Q to make the EPS to 20sen, that will represent a PE of 86/20 = 4.3sen.

My simple way of Fair Value for Kfima should be around = 5 X 20 = RM1.00.

Worth considering.