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KLK, a 4% yield
Current, target price 21, 25 (+21%)
September 17th, 2021
1 minute read
Sales up strongly
Costs lower
1 minute read
Sales up strongly
- Sales were up a strong 15% in the second quarter to 5,173 million ringgit which is ahead of our forecast 4,644 million ringgit.
- Average quarterly growth is now at 9%.
- We predict average growth in the next 12 months of 3% which will bring sales to 5,809 million ringgit by the second quarter of 2022.
Costs lower
- The cash costs ratio improved to -85% in the second quarter & profit jumped to 829 trillion ringgit with low non cash costs:
- Average costs are now -88%.
- We conservatively use the average -88% costs to precut a 755 million ringgit profit in the second quarter of 2022.
Cashflow higher leverage
Balance sheet, higher leverage
Valuation, a 4% yield
- After a negative first quarter, cashflow was back at 222 million ringgit with investment spending of -225 in the second quarter.
- Average quarterly Cashflow is now at 152 million ringgit.
- We use the same -225 million ringgit investment which with higher sales gives a higher 464 million ringgit Cashflow in the second quarter of 2022.
Balance sheet, higher leverage
- Cash increased in the second quarter from 3,523 to 3,914 million dollars.
- Liabilities also increased from 9,574 to 10,189 million ringgit so net cash worsened from -6,051 to -6,275 million ringgit.
- With our forecast higher cashflow & a -879 million ringgit equity payout, net cash will improve to -5,349 million ringgit in 12 months time.
Valuation, a 4% yield
- KLK capital from the last five years declined to 885 million ringgit in the second quarter but should rise to 2,650 in 12 months time.
- At the current value of 21,830 million ringgit, based on our forecasts, it’s at 0.88X assets with a 4% yield.
- Our cashflow forecast is 1,764 million ringgit which is a 12X valuation. At 15X gives a 21% higher target price of 25 ringgit.