CI Holding 2Q2011 Result

1. Let's compare CI HOLDGINDS result against the average analyst expectation for FY2010:

Net income: Average analyst expectation FY2011 = RM42.83m, 1H2011 net income = RM23.05m
Earnings per share or EPS: Average analyst expectation FY2011 = 30.3 sen, 1H2011 EPS = 16.23sen
Overall, the 1H2011 Result is better than analyst expectation with 1H2011 net income already making 53.8% of consensus estimate

2. 2Q2010 net income of RM11.28m is an increase of 43% y-o-y but a 4% decrease qoq. In the announcement to Bursa, CIHLDG mentioned that "The higher profit after tax was mainly attributed to further economies of scale and prudent cost management"

3. Average analyst target price: RM4.81 as of time of writing, range of targetp price Range RM4.65 to RM4.90

4. Interim dividend of 5 sen less income tax of 25% was announced, ex-date = 16-Feb-2011

5. CI HOLDING BHD is trading at forward PER ending Dec 11of 10.89x, which is lower than F&N 16.63x.


My view: Overall, the 2Q2011 result is better than the market expectation. With RSI at 36.4 (almost Oversold), the time should have come for this share to move upwards.

Outlook for 2011

It's the end of 2010 and most investors are discussing about 2011 outlook. Here's some of the report or news that I find interesting to share with you all:

i) Barrons bullish outlook on US market
   "Collectively, the 10 strategists and investment managers surveyed by Barron's see the S&P 500 finishing
    next year near 1373, roughly 10% higher than Friday's close at 1244"
    Full report here: Barrons 2011 Report
ii) 2011 Market Outlook: Rebound to Expansion
    "We believe the theme of transition from rebound to expansion is appropriate for the 2011 outlook 
     because we expect a transition year for both the economy and the financial markets.
     PNC projects that the U.S. economy as measured by real GDP will eclipse the previous peak set in
     2007 by the end of the first quarter of 2011 and move into expansion mode."

My view on Malaysia stock market:
i) Bullish on CPO counters due to expected higher oil price. Counters to watch: Companies which have prepared well for this commodity cycle include CBIP. The company originally build palm oil mills but have planted palm oil several years ago. Expect to see the earnings from plantation to be bigger in the coming quarterly result. Will write on CBIP fully later.
ii) Bullish on Sarawak counters due to expected election in 2011. Counters to watch are construction players in Sarawaj e.g. HSL and NAIM. Catalysts will be the possible new construction contract announcement. Will write on NAIM later.
iii) Neutral on F&B counters due to higher CPO, sugar price and pressure from higher labour cost. Counters that I like within F&B sector: CIHLDG and MAMEE. However, the key catalysts will be their ability to transfer the inflation cost to consumer. Will write on MAMEE later.