Excel – http://1drv.ms/13Z7Pfo
Notes – http://tinyurl.com/n476z75
- Fair values:
- 5-Y DCF:
- Good Scenario: 4.59 (Fair value uncertainty: LOW)
- Base Scenario: 4.11 (Fair value uncertainty: LOW)
- Bad Scenario: 3.67 (Fair value uncertainty: MEDIUM)
- Ugly Scenario: 3.29 (Fair value uncertainty: MEDIUM)
- If growth of FCFF in the next 5 years is -5.5%, KMLOONG still worth 2.68.
- Considering the factors surrounding this sector and this company, I think the assumed FCF growth may not supported by future earnings. I will take the bad/ugly scenario into consideration.
- Absolute EY%
- FY14 (EPS: 0.198) – Fair value 2.49 (Fair Value Uncertainty: HIGH)
- R4Q (EPS: 0.264) – Fair value 3.32 (Fair Value Uncertainty: MEDIUM)
- FY15 (EPS: 0.225) – Fair value 2.83 (Fair Value Uncertainty: HIGH)
- FY16 (EPS: 0.226) – Fair value 2.84 (Fair Value Uncertainty: HIGH)
- EPS applied to reach the current stock price (2.68): 0.213
- Absolute PE
- FY14 (EPS: 0.198) – Fair value 2.04 (Fair Value Uncertainty: VERY HIGH)
- R4Q (EPS: 0.264) – Fair value 2.73 (Fair Value Uncertainty: HIGH)
- 5-Y DCF:
- The CPO price moves in a cyclical manner. In a worst case scenario, KMLOONG, a net cash company with a low cost of production and an experienced management team would be able to withstand the turbulence and even take up expansion opportunities. Even in the ugly senario, it still worth 3.29.
- Nevertheless, in overall, valuation of KMLOONG is not so attractive.
- Unfavourable outcome of a court case made by some natives against its subsidiary, Tetangga Akrab Pelita (Pantu) Sdn Bhd (currently known as Winsome Pelita (Pantu) Sdn Bhd), regarding their customary rights to land. The group has accounted for impairment of assets and provision of contingent liabilities of RM3mil.
- I will closely monitor FCPO prices, and consider to buy KMLOONG when only FCPO turns bullish.
Latest Financial – Q3 2015 Financial Report (31 Dec 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1840665
At the time of writing, I did not own shares of KMLOONG.