KMLOONG – Fundamental Analysis (30 Mar 2015)

KMLOONG Analysis:-

Excel –

Notes –

My View:-

  • Valuation:
    • 5-Y DCF:
      • Good Scenario: 4.58 (Fair value uncertainty: LOW)
      • Base Scenario: 4.02 (Fair value uncertainty: LOW)
      • Bad Scenario: 3.52 (Fair value uncertainty: MEDIUM)
      • Ugly Scenario: 3.07 (Fair value uncertainty: HIGH)
      • At current price (2.78), based on RDCF, assumption of FCFF growth rate in the next 5 years is -5.5%.
      • 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%
      • Trailing:
        • FY15 (EPS: 0.243) – Fair value 3.06 (Fair Value Uncertainty: HIGH)
        • R4Q (EPS: 0.243) – Fair value 3.06 (Fair Value Uncertainty: HIGH)
      • Forward:
        • FY16 (EPS: 0.247) – Fair value 3.11 (Fair Value Uncertainty: MEDIUM)
        • FY17 (EPS: 0.268) – Fair value 3.37 (Fair Value Uncertainty: MEDIUM)
      • EPS applied to reach the current stock price (2.78): 0.221
  • 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.
  • In overall, valuation of KMLOONG is not bad, but less attractive. KMLOONG is a good counter for trading.
  • 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.
  • The FFB production for the current quarter and year-to-date were 77,300 MT and 304,700 MT respectively which were 10% lower and 6% higher comparing the corresponding periods in last year.
  • The plantation operations did not face problem in selling its FFB production as most of the produce was supplied to mills within the Group. Average FFB price was 6% higher for the current year-to-date as compared to last year.
  • I will closely monitor FCPO prices, and consider to buy KMLOONG when only FCPO turns bullish.

Latest Financial – Q4 2015 Financial Report (26 Mar 2015)

At the time of writing, I did not own shares of KMLOONG.



2 thoughts on “KMLOONG – Fundamental Analysis (30 Mar 2015)

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