LTKM - Value for money!

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LTKM - Value for money!

Publish date: Mon, 20 Jul 2015, 12:15 AM

BASIC INFORMATION

Exchange: KLSE

Current Price: RM 1.890

Diluted Shares Outstanding: 130,104,006

Market Capitalization: RM 245.9 million

Public Float: 22%

Industry: Consumer Goods

QUANTITATIVE ANALYSIS

	Previous FY	TTM	MRQ	Criteria (Annualised)
Valuation
Historical P(EBITDA)R	2.57	4.49	-	<10
Trailing PTBV	-	1.50	-
Dividend Yield	-	3.2%	-
Capital Structure	-	-	-
Long Term Debt/Total Asset	10.6%	5.8%	-	<30%
Total Debt/Total Asset	24.5%	16.7%	-	<60%
Management Effectiveness	-	-	-
ROE (use EBITDA)	29.2%	40.4%	7.6%	>15%
ROA (use EBITDA)	22.5%	30.0%	6.3%	>6%
ROIC (use EBITDA)	26.8%	34.7%	7.1%	>4%
Liquidity	-	-	-
Cash Ratio	0.60	1.44	-
Quick Ratio	1.31	2.60	-	>0.8
Profitability	-	-	-
EBITDA Margin	25.9%	29.2%	27.3%	>5%
EBITDA (cents)	35.50	42.11	10.33
Cash Flow	-	-	-
Operating Cash Flow/Net Profit	0.86	1.44	2.46	>0.5
Free Cash Flow/Net Profit	0.78	1.24	2.42	>0.2

	YoY	QoQ	Criteria
Growth
Revenue	15.0%	4.3%	>10%
EBITDA	119.8%	26.7%	>5%
EBITDA/Equity	85.3%	5.3%	>0%

Comments: All ratios passed with flying colours except revenue growth QoQ at a mere 4.2%.

QUALITATIVE ANALYSIS

Advantages: Demand for eggs and poultry goods are inelastic, hence LTKM is recession-proof. Also, impact of GST on LTKM is minimal.

Risks: Heavily reliant on sale of eggs and other poultry goods which contribute approx. 96% of LTKM's earnings. An outbreak of bird flu will significantly affect the company's performance.

RESULTS

Target Price: RM 3.140

Potential Upside: 66%

Margin of Safety: 40%

Maximum Entry Price (Fundamental): RM 2.200

Recommended Entry Price (Technical): RM 2.000

Cut Loss: RM 1.640

Holding Period: Until end of May 2016 (After QR)

Email me at equitywhiz@outlook.com for more analysis like this.
DISCLAIMER
Financial data is mostly obtained from Morningstar.com and i*Trade@CIMB. Should you have any doubts in the accuracy of this data source, kindly refrain from using this analysis for your investment decisions. The analysis has a buy/sell recommendation, however EquityWhiz will not be liable for any losses as a result of this analysis.

LTKM (7085)