BCT III

My Dearest Doc,

Here is an update to posting: BCT Part II

BCT announced its earnings yesterday. I have updated the earnings table.



Extremely early days but I am more than likely to be sceptical cause the first 2 quarters of fy 07 earnings (3.546 + 2.720) is less than the last 2 quarters of its fy 06 (2.335 + 4.015). However, it's still very much early days for now.

I would compare what this earnings with what I had written in the previus posting ( BCT Part II ). (Added new comments in italics)

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Total earnings for the 3 quarters is some 9.896 million. ( Total net earnings for these 4 quarters is now 12.616 million)

Regarding the last two paragpraphs. The comments from HDBS and KN.

Jun 8th, 2007, from HDBS

• Cheap stock. With 3-year CAGR of 40%, BCTT shares are trading at only 5.0x FY08F EPS. We believe it should be worth 8x FY08 EPS or RM1.70/share, which implies a very conservative 0.2x PEG.

Key note for me is 3-year CAGR of 40%. (CAGR of 40%???!!!)

This means that HDBS is really assuming and expecting an amazing growth for BCT. Have a look at HDBS earnings table posted below.

So, BCT which earned 10.5 million for its last fiscal year ( its current earnings for 3 quarters is 9.896 million) is expected to earn 25.8 million by FY 2008. (We now have 4 quarters of earnings and they only total 12.616 million. Based on these earnings indications, yes BCT would probably perform much better than its last fiscal year earnings of 10.5 million... )

And because it is expected to do so good, and based on this expected achievement, BCT is then reasoned cheap by HDBS.

For it's rather optimistic.

Let's compare with KN.

Jun 11th, 2007, from KN

• Maintain BUY with a revised 12-month target price of RM1.56 (+30.0%) based on a FY08 P/E of 10.0x (2-year (FY06-FY08) PEG ratio of just 0.52x). BCTT’s FY07 and FY08 net profit growth of 45.9% and 38.6% y-y remain respectable despite our slight exchange rate driven earnings downgrades. At RM1.03, BCTT shares are trading at highly attractive FY07 and FY08 P/E of 8.8x and 6.6x, respectively.

My opinion? Strange. Cos how could "BCTT’s FY07 and FY08 net profit growth of 45.9% and 38.6% y-y remain respectable" when this is but just a projection. Doesn't BCT has to achieve these targets before being getting its respects? (At this rate, the earnings growth is simply not going to be as terror as projected!)

Anyway, here is KN's earnings table projection for BCT.

KN's net earnings projection for BCT's FY 2008 is 20.9 million. Which is much lower than HDBS projection of 28.9 million!

So for me, it appears to me, that the high target prices are assigned to BCT because both HDBS and KN expects fantastic growth for BCT.

Is this achievable?

For me, this is one of the issue I would address. However, as it is, there isn't much data available but 3 quarterly earnings data from BCT.

How? As mentioned earlier, we now have 4 quarters of earnings and they only total 12.616 million. Based on these earnings indications, yes BCT would probably perform much better than its last fiscal year earnings of 10.5 million... which is decent by all means BUT the performance shown by BCT simply pales in comparison to what HDBS and KN had projected.

Rgds