Date announced 24/11/2010
Quarter 30/09/2010 Qtr 3 FYE 31/12/2010
STOCK KFC C0DE 3492
Price $ 3.95 Curr. ttm-PE 21.87 Curr. DY 1.52%
LFY Div 6.00 DPO ratio 36%
ROE 16.6% PBT Margin 8.9% PAT Margin 6.0%
Rec. qRev 631551 q-q % chg 4% y-y% chq 8%
Rec qPbt 56236 q-q % chg 8% y-y% chq 14%
Rec. qEps 4.82 q-q % chg 7% y-y% chq 9%
ttm-Eps 18.06 q-q % chg 2% y-y% chq 16%
Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 23.00 Avg. L PE 20.00
Forecast High Pr 5.30 Forecast Low Pr 3.26 Recent Severe Low Pr 3.26
Current price is at Middle 1/3 of valuation zone.
RISK: Upside 66% Downside 34%
One Year Appreciation Potential 7% Avg. yield 2%
Avg. Total Annual Potential Return (over next 5 years) 9%
CPE/SPE 1.02 P/NTA 3.62 NTA 1.09 SPE 21.50 Rational Pr 3.88
Decision:
Already Owned: Buy, Hold, Sell, Filed; Review (future acq): Filed; Discard: Filed.
Guide: Valuation zones - Lower 1/3 Buy; Mid. 1/3 Maybe; Upper 1/3 Sell.
Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr
Stock Data: Recent Stock Performance:
Current Price (11/19/2010): 4.25
(Figures in Malaysian Ringgits)
1 Week 2.2% 13 Weeks 30.4%
4 Weeks 59.2% 52 Weeks 129.7%
KFC Holdings (Malaysia) Berhad Key Data:
Ticker: KFC Country: MALAYSIA
Exchanges: KUL Major Industry: Recreation
Sub Industry: Restaurants & Fast Food Franchisers
2009 Sales 2,297,431,000
(Year Ending Jan 2010).
Employees: 13,217
Currency: Malaysian Ringgits Market Cap: 3,370,675,000
Fiscal Yr Ends: December Shares Outstanding: 793,100,000
Share Type: Ordinary Closely Held Shares: 594,819,200
Day's Range: 3.92 - 4.00
52wk Range: 2.70 - 11.50
Volume: 727,600
Avg Vol (3m): 2,204,970
Related:
Dear Sir:
ReplyDelete1. How do you make the "Forecast High Pr 5.30 Forecast Low Pr 3.26" on KFC Holdings (Malaysia) Berhad ? Please explain or is there any formula use to calculate them ?
2. What is CPE & SPE ?
What was posted was a summary of a very large program. I shall attempt to answer your questions.
ReplyDeleteOn your first question: The Forecast High Pr and Forecast Low Pr refer to the predicted prices of this counter 5 years from today, based on various conservative assumptions.
In the case of KFC, these assumptions were made:
EPS GR 5%
Avg.H PE 23.00 Avg. L PE 20.00
DPO ratio 36%
Latest ttm-EPS 18.06
To calculate the potential High Pr 5 years from now, using the above assumptions:
On the 5th year,
1. As eps is growing at 5%, ttm-EPS will be = 18.06*(1+0.05)^5 = 23.05
2. At DPO ratio of 36%, its dividend will be = 36% of [18.06*(1+0.05)^5] = 1.91
3. Assuming the High PE of 23, the High Pr will be = 23 x [18.06*(1+0.05)^5] = 5.30
4. Correspondingly, using the Low PE of 20, the Low Pr will be = 20 x
[18.06*(1+0.05)^5] = 4.61
As an alternative of 4 above, I often use the recent severe Low Pr in the market for the Forecast Low Pr value, as this is even more conservative. In my post, the recent severe Low Pr was 3.26. This was the low price of KFC on 2/11/2010 of 13.02 after adjusting for bonus.
Sometimes, I use the Forecast Low Pr value using another method, based on the concept of Dividend Support Price, which I shan't attempt to explain.
CPE = Current PE = Current ttm-PE
ReplyDeletettm-EPS 18.06 sen
Current Price 3.95
CPE = 3.95*100/18.06 = 21.87
SPE = Signature PE
This is the usual PE that the market usually give to this counter. It is historical. I have a chart that tracks the PE of the counter over many quarters over many years. On can often have a good gauge of the usual high and low PE that these counters are trading at.
For example, since 2007, the lowest PE of KFC was 19.14 and the highest PE of KFC was 31.50. The PEs were mainly clustered between 22 and 24 over many quarters.
I chose to give a low PE of 20 and a high PE of 23 in my analysis, and a signature PE of (20+23)/2 = 21.5.
Valuation is not an exact figure. It is based on many assumptions. As a value investor, one make these assumptions conservative.
The most important factors determine the success of your investing, besides the ability to put a value to the stock, is the ability to pick up Good Quality Businesses to invest into. The above assumptions and valuations are only applicable to High Quality Companies that can continue to grow its business year on year.
The biggest margin for errors will be using a rather enthusiastic EPS growth rate and rather high PEs in your assumptions.
Cheers.