23 November 2011

KEN HOLDINGS BHD (KEN, 7323) - Q3 2011: Within Expectation

Everyday, one of the happy activities I do is to read the financial reports of my invested companies. What I feel about from the financial report is that it is really very difficult to earn 10sen from RM1.00 annually. You may think that it is a easy task. Let me clarify properly: get profit from RM0.10 from RM1.00 annually is equivalent to interest rate of 10% annually, which is 300% more than our current fixed deposit rate (around 3.3%). So, are you still think it is a easy task to complete annually?

Let's go back to the main focus today, KEN (7323) third quarter report also comes out already. So far so good. After receiving so many Cash from receivable, finally, KEN did what I expect it to do from last quarter, that is, CAPEX.

Although I prefer low CAPEX company, with reasonable CAPEX is vital, especially for properties companies. Based on Cash flow statement, a total of 49.8Million Cash was generated by Q3, then 4.9Million was used for CAPEX (Improvements in Investment properties), after some financing activities, net cash of 40.2 Million was generated and retained from last nine months!!! So, what will KEN do in the coming quarter? I still expect KEN to use up 50% Cash for CAPEX (to increase land bank), if possible. Special dividend or bonus is also expected at the end of this fiscal year as a reward to its shareholders (I am one of them ^^). Based on historical data, KEN is used to give bonus shares from time to time. With Retained Earning of 54million Vs Share capital of 95.8million, it is possible for KEN to give one free bonus share for two shares. Nevertheless, with Cumulative net outstanding treasury shares as at to-date (23/11/2011) of 5,708,300 (5.7million) Vs Weighted average number of ordinary shares of 91million, one treasury share for 16 shares is also possible.

By the way, sometimes investment can be simply buy a good company and wait for reward as I was suddenly been rewarded special dividend from OPCOM. But some computation and estimation can always help investors to know how far they can go in the road map of investment.

Before end up this post, let's see what KEN comments in this quarter report.
The revenue for the current quarter at RM26.2 million was higher compared to the preceding year corresponding quarter. The profit before tax for the current quarter at RM6.3million was lower than the preceding year corresponding period of RM8.5 million due mainly to lower margin mix recorded for the current quarter. Profit after tax at RM16.2 million for the 9 months ended was higher than the preceding year corresponding period of RM9.1 million in view of higher volume of revenue.
The profit before tax for the current quarter at RM6.3million was lower than the preceding quarter of RM7.8 million was mainly due to lower margin mix recorded for the current quarter.
The Group’s KEN Rimba Green Township in Shah Alam, Selangor consisting of Ken Rimba Legian’s double storey link houses together with Ken Rimba Commercial Centre consisting of shop/office units are progressing on schedule. Barring any unforseen circumstances, the Board of Directors is of the view that the Group will record favourable performance for the financial year ending 31 December 2011.

Again, so far so good. So, let's wait whether got any surprise from KEN. That's all for today. More fascinating articles and sharing will be updated from time to time in Xaivier Blog. So, you are welcome to subscribe our feed, look at our sitemap or simply visit our Homepage.

Written by: Xaivier Chia


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