KIM LOONG RESOURCES BERHAD Analysis Date:

(KMLOONG)

All figures in thousands of Ringgit Malaysia except per share values and ratios

Financial Year: 2012 31/01/2012 Latest Quarter: 31/01/2012

Price: Stock Category: Fast Grower

Overview (Reuters):

Overview (Bloomberg):

Board: Main Board

FBMKLCI: NO

Industry: PLANTATIONS

Sub-Sector: OIL PALM/RUBBER AND OTH CROP PRODUCTION

Ownership: Corporate Owned (Local)

Investment Strategy

Portfolio Strategy: Lump Sum + Top Up Averaging Down Method: Dollar Cost/Value Averaging;Stop Loss

Portfolio Execution: Buy and Monitor;Momentum Basis for Buying & Selling:

2.40

29/06/2013

Kim Loong Resources Berhad is engaged in the cultivation of oil palm and cocoa, and investment holding. The

Company operates into two business segments: the Plantation segment and the Milling segment. The plantation

segment is engaged in the cultivation of oil palm and cocoa. The Milling segment is engaged in processing and

marketing of oil palm products. The Company’s products include crude palm oil, crude palm kernel oil, palm kernel,

palm kernel expeller, oil palm fronds, shredded empty bunch fiber and shell. Its products also include solvent

extracted mesocarp fiber, solvent extracted mesocarp oil, organic high K, munching compost, tocotrienol rich

fractions and biogass. In June 2012, the Company disposed Winsome Jaya Sdn. Bhd.

DCF Intrinsic Value

EY % OSCILLATOR

Institutional Sponsorship

Market Direction

Kim Loong Resources Berhad, an investment holding company, engages in the cultivation of oil palm and cocoa

products in Malaysia. The company is also involved in processing and marketing oil palm products; and extracting

residual oil from wet palm fiber and conversion of palm fiber. Its products include oil, palm kernel, palm kernel

expeller, solvent extracted mesocarp fiber/oil, and biomass products. In addition, the company engages in trading

fresh fruit bunches; and manufacturing health supplements and food ingredients, as well as bio-fertilizers. Further,

it is involved in biogas and power generation activities, as well as building construction activities. The company is

based in Johor Bahru, Malaysia. Kim Loong Resources Berhad is a subsidiary of Sharikat Kim Loong Sendirian

Berhad.

Due-Diligence

Measures 2003/1/31 2004/1/31 2005/1/31 2006/1/31 2007/1/31 2008/1/31 2009/1/31 2010/1/31 2011/1/31 2012/1/31 5-Y Avg. 10-Y Growth 5-Y Growth Sparkline Grade

ProfitabilityConsistently increasing Sales

Revenue (Pref. ≥ 8%)

147,318 196,131 230,705 218,679 263,063 469,875 507,084 451,533 563,408 768,332 620 17.40% 10.89%

Consistent and increasing ROE

(Pref. ≥ 15%)

5.91% 6.28% 5.90% 3.81% 7.22% 15.43% 16.72% 11.41% 13.09% 19.03% 15.82% 14.65% 1.75%

Consistent and increasing ROIC

(Pref. ≥ 15%)

5.30% 2.38% 2.69% 0.90% 5.03% 21.04% 16.07% 13.30% 15.49% 26.94% 20.34% 27.76% 4.58%

Increasing Net Profit Margin (Pref.

≥ 10%)

9.61% 8.30% 7.11% 6.52% 11.57% 20.44% 20.59% 17.60% 16.09% 21.48% 19.30% 12.37% -1.47%

Cash FlowConsistently increasing Net Cash

from Ops. (Pref. ≥ 8%)

10,382 16,464 24,174 20,215 39,418 87,072 82,920 85,739 96,991 148,994 115 28.94% 12.31%

Consistent and increasing CROIC

(Pref. ≥ 15%)

N/A 0.85% 12.12% 7.03% 13.12% 26.74% 13.12% 23.49% 22.78% 32.68% 26.32% 31.54% 9.53%

Increasing Free Cash Flow / Sales

(Pref. ≥ 5%)

N/A 1.36% 17.25% 10.74% 13.56% 16.62% 10.85% 23.71% 18.18% 19.76% 18.90% 20.35% 8.62%

Financial RisksIncreasing Debt Coverage Ratio

(Pref. ≥ 150%)

N/A 3.71% 46.72% 56.82% 120.98% 262.71% 120.36% 237.31% 288.04% 388.83% 303.97% N/A 16.57%

Increasing Quick Ratio (Pref. ≥

100%)

61.95% 53.59% 59.60% 175.46% 193.11% 311.33% 294.20% 290.26% 262.95% 361.67% 314.81% 22.40% 1.87%

Growth Quality

Column1 2003/1/31 2004/1/31 2005/1/31 2006/1/31 2007/1/31 2008/1/31 2009/1/31 2010/1/31 2011/1/31 2012/1/31

Revenue % 147318 196131 230705 218679 263063 469875 507084 451533 563408 768332

Year over Year — 33.13% 17.63% -5.21% 20.30% 78.62% 7.92% -10.95% 24.78% 36.37%

3-Year Average — — 22.43% 5.44% 6.56% 38.24% 32.81% -1.99% 5.27% 26.58%

5-Year Average — — — — 12.68% 18.79% 23.40% 21.06% 14.83% 10.89%

10-Year Average — — — — — — — — — 17.40%

EBIT % 15259 10475 12253 4180 18709 83061 89828 80814 92865 166919

Year over Year — -31.35% 16.97% -65.89% 347.58% 343.96% 8.15% -10.03% 14.91% 79.74%

3-Year Average — — -10.97% -45.93% 21.16% 149.46% 78.44% -1.37% 1.66% 36.27%

5-Year Average — — — — -5.11% 45.64% 69.74% 74.93% 31.77% 14.29%

10-Year Average — — — — — — — — — 34.50%

Net Income % 10385 13607 13250 11381 22673 59250 65375 48138 58255 96573

Year over Year — 31.03% -2.62% -14.11% 99.22% 161.32% 10.34% -26.37% 21.02% 65.78%

3-Year Average — — 12.18% -8.93% 26.86% 82.49% 52.95% -10.38% -5.77% 34.81%

5-Year Average — — — — 13.83% 34.80% 48.42% 39.43% 16.80% 8.62%

10-Year Average — — — — — — — — — 26.00%

EPS % 0.1 0.13 0.12 0.07 0.13 0.31 0.218 0.159 0.1912 0.3156

Year over Year — 30.00% -7.69% -41.67% 85.71% 138.46% -29.68% -27.06% 20.25% 65.06%

3-Year Average — — 9.12% -30.95% 4.00% 74.40% 25.85% -33.38% -6.56% 34.28%

5-Year Average — — — — -0.94% 18.18% 26.82% 21.58% 1.04% -0.95%

10-Year Average — — — — — — — — — 11.35%

Cash From Ops. % 10382 16464 24174 20215 39418 87072 82920 85739 96991 148994

Year over Year — 58.58% 46.83% -16.38% 94.99% 120.89% -4.77% 3.40% 13.12% 53.62%

3-Year Average — — 42.26% 10.26% 24.45% 73.02% 37.18% -0.77% 7.84% 27.63%

5-Year Average — — — — 28.74% 38.20% 39.26% 36.33% 17.85% 12.31%

10-Year Average — — — — — — — — — 28.94%

Free Cash Flow % N/A 2677.04 39802.12 23488.08 35662.2 78112.94 55017.75 107070.5 102443.75 151852.25

Year over Year — — 1386.80% -40.99% 51.83% 119.04% -29.57% 94.61% -4.32% 48.23%

3-Year Average — — — 108.59% -5.49% 60.08% 21.68% 15.77% 31.08% 17.47%

5-Year Average — — — — — 66.37% 18.49% 34.68% 24.26% 19.51%

10-Year Average — — — — — — — — — 37.43%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Growth Quality

Revenue EBIT Net Income Cash From Ops. FCF

Stock vs Sector

OIL PALM/RUBBER AND OTH CROP PRODUCTION

Stock Board Market Cap PE Dividend Yield EPS ROE ROR ROTA

AASIA M 143.996 21.82 1.67 0.055 4.33 15.78 2.33

AMOLEK M 33.84 13.74 0 1.37 22.11 0.00 21.02

BKAWAN M 8413.854 13.75 3.37 1.453 16.42 181.83 15.73

BLDPLNT M 722.5 6.78 3.18 1.254 17.75 5.62 8.23

CEPAT M 297.747 14.17 2.67 0.068 5.22 9.61 3.63

CHINTEK M 824.094 15.63 4.43 0.577 8.55 44.18 8.37

DUTALND M 327.633 0 0 -0.008 0.00 0.00 0.00

FAREAST M 1057.597 12.57 3.34 0.597 8.31 18.61 6.68

FGV M 16416.684 0 0 0 11.15 5.70 6.07

GENP M 7102.799 21.72 1.34 0.431 9.55 26.52 6.92

GLBHD M 227.371 7.85 3.92 0.134 6.66 10.61 4.60

GOPENG M 143.463 50 19.13 0.016 1.06 19.50 1.00

HARNLEN M 144.672 10.83 1.28 0.072 5.23 7.97 3.15

HSPLANT M 2176 8.61 7.35 0.316 13.47 38.63 11.96

IJMPLNT M 2565.52 16.33 3.13 0.196 11.37 26.64 8.54

INCKEN M 445.382 0 0 -0.01 0.00 0.00 0.00

IOICORP M 34148.61 19.1 2.92 0.28 14.17 11.44 7.76

KLK M 22887.307 18.89 3.03 1.137 17.04 11.46 10.64

KLUANG M 189.602 0.03 0.48 0.112 1750.34 94.48 1741.75

KMLOONG M 734.627 7.6 6.72 0.316 19.04 12.57 13.47

KRETAM M 774.913 19.63 0 0.108 4.41 15.68 3.65

KSENG M 1843.533 24.64 1.96 0.21 4.21 5.95 3.67

KULIM M 4697.534 5.65 27.03 0.663 21.13 91.71 9.02

KWANTAS M 638.94 18.98 0 0.108 2.49 2.60 1.45

MALPAC M 118.5 0 0 -0.057 0.00 0.00 0.00

MHC M 216.198 13.1 2.09 0.084 5.75 58.97 4.84

NPC M 240 7.12 2 0.281 11.36 7.35 7.36

NSOP M 393.131 11.79 7.5 0.475 8.83 29.44 6.77

PINEPAC M 56.177 0 0 -0.045 0.00 0.00 0.00

PLS M 431.244 36.67 0 0.036 11.38 7.96 3.57

RSAWIT M 1125.313 16.54 1.74 0.046 7.71 18.95 4.23

RVIEW M 272.37 14.89 4.76 0.283 10.52 66.18 9.91

SBAGAN M 190.55 28.9 0.79 0.109 1.80 53.80 1.75

SOP M 2446.136 10.11 0.89 0.559 19.89 20.75 11.82

SWKPLNT M 756 9.28 6.04 0.292 14.46 17.02 10.68

TDM M 1155.698 11.27 5.64 0.417 8.30 22.49 6.76

THPLANT M 1608.806 10.28 2.5 0.215 13.99 41.65 6.20

TSH M 2027.408 26.2 1.04 0.093 8.71 7.83 3.43

UMCCA M 1534.583 17.85 3.48 0.424 8.12 37.12 7.39

UNICO M 925.62 12.16 4.21 0.088 9.10 30.04 7.36

UTDPLT M 5786.125 16.91 4.5 1.65 15.91 28.92 14.43

7.42%

-4.23%

13.87% 14.54%

6.28%12.25%

16.54% 14.16%

69.84%

14.55%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

Debt to Equity - 5Y Avg EPS - 5Y Growth Net Profit Margin - 5YAvg

ROE - 5Y Avg Sales - 5Y Growth

Stock vs Sector

Company Sector

Economic Moat

Area Comments

Key Ratios -

Monopoly situation -

Brand leadership /

Operating strategy

-

Barriers to Entry High start-up costs and hard to build product differentiation

Marketship leadership -

Economic Moat I couldn't find a strong differentiation and economic moat. However, looks like

KMLOONG has a very solid and sound management team.

Future Growth Strategy/Drivers

Source Future Growth Strategy/Drivers

Annual Report The long term outlook for the palm oil industry in Malaysia remains good. The palm oil

price is expected to remain good and steady in the financial year 2013 due to uncertainty

in weather conditions in major soybean oil producing countries and the steady crude oil

price, arising from geo-political instability in producing countries and in the Middle East.

The production cost for palm oil is expected to be higher in view of the minimum wages

for Malaysia set at RM900 in Peninsular and RM800 in Sabah and Sarawak.

The Group expects the CPO production of its milling operations to remain steady in the

financial year 2013 as compared to that achieved in the financial year 2012. The

downstream projects such as palm-pressed fibre oil extraction plant, kernel oil solvent

extraction plant and biogas project are expected to generate more than RM10 million in

revenue.

Installation of our third biogas plant at our Telupid Mill is in progress. We are also

implementing the gas engine system to generate renewable electrical power from the

biogas to all our three mills to efficiently convert biogas generated from palm oil mill

effluent (“POME”) to power. This project will be able to minimize disruption of power

supply, even during our low crops period/mill shut down for maintenance, to our

downstream projects such as kernel crushing, solvent extraction, bio-fertiliser as well as

staff and labour quarters.

Analyst Reports -

Risk Management

Source Risks

Annual Report -

Analyst Reports http://klse.i3investor.com/files/my/ptres/res14798.pdf

- Going forward, the outlook for Kim Loong continues to be unexciting, asthe group has

no major new maturities coming on stream.

- Kim Loong had a poor year for FFB production as full year production fell 10% y-o-y to

280,400mt. On their milling business, the group saw flat y-o-y CPO production at

208,000mt for the year

- With no major new maturities coming on-stream going forward, we see no major

growth catalysts for the stock.

Shareholder Wealth Creation

Buy and Monitor Return (Pref. ≥ 8%) 8%

3-Y Price CAGR % 7.17%

5-Y Price CAGR % -2.12%

10-Y Price CAGR % 10.85%

Full History Price CAGR % 5.59%

Consistent and increasing Dividend Payout % (Pref. ≥ 60%) 60%

Increasing EPS

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

160.00%

180.00%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Dividend Payout %

0.1

0.130.12

0.07

0.13

0.31

0.218

0.159

0.1912

0.3156

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

EPS

Increasing DPS

Historical Weekly Price Chart

0.06 0.07 0.07 0.07

0.1

0.18

0.36

0.10.12

0.16

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

DPS

Market Timing

Discounted Cash Flow

Absolute P/E

EY % Oscillator

Buy Under 1.39

Sell Above 2.14

Good Base Bad Ugly Good Base Bad Ugly Good Base Bad Ugly

NOSH.

Fair Value 7.73 7.04 6.40 5.81 8.20 7.23 6.36 5.59 8.95 7.45 6.22 5.21

Desired M.O.S.

Buy Under 6.42 5.85 5.32 4.83 6.82 6.01 5.28 4.64 7.44 6.19 5.17 4.33

Current Price

Actual M.O.S. 69% 66% 63% 59% 71% 67% 62% 57% 73% 68% 61% 54%

2.4

3-Y 5-Y 10-Y

308.43

17%

Good PE Base PE2 Bad PE3

Expected Earnings Growth 15.00% 18 12.00% 16 9.00% 14

Dividend Yield 6.67% 7 6.67% 7 6.67% 7

Business Risk Factor

Financial Risk Factor

Earnings Visibil ity Factor

Fair P/E

Current EPS

Fair Price

Margin of Safety

Buy P/E

Buy Price

Expected DPS

Expected Dividend Yield

Sell P/E

Sell Price 8.539.5810.67

1.82%

24.76 22.78 20.80

33.80 30.35 27.03

0.17

2.17%1.98%

6.577.197.81

16.87%

0.96

0.92

29 27 24

9.13 8.40 7.67

0.94

0.32

High Low

Green Zone Price($)

11.85% Price ($) RM1.39 10%

5.21%

7.69% Price ($) RM2.14 10%

Red Zone Price($)

Low High

EY% Price ($)

Green Zone EY% 12.37% RM1.33

Red Zone EY% 7.17% RM2.29

Trading Range

The current quarter's EPS is up more than 15% from the same quarter the year before.

Apr-12 0.06 Apr-13 0.05

Growth -19.08%

0.03

0.07

0.06

0.04 0.05 0.05

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

Dec-12 Jan-12 Apr-12 Jul-12 Jan-13 Apr-13

Quarterly EPS

Discounted Cash Flows Valuation 13

Discount Rate

Average risk

premium

Average Risk

free rate

Unadjusted

Discount %

Business Risk

Factor

Financial Risk

Factor

Discount %

Default Value 9.41%

Custom Value 12.00%

Margin of Safety

Initial RRR Dividend Yield Est. EPS

Growth

Unadjusted

MOS

Business Risk

Factor

Financial Risk

Factor

MOS

Default Value 35% 11% 17%

Custom Value 8%

Growth Estimation

Est. FCF

Growth (Base

Line)

Terminal % Decay Rate

(Yr4E-Yr7E)

Extra Decay

(Yr8E-Yr10E)

Default Value 8% 3% 15% 20%

Custom Value

Financial Figures

Shares Out. 2012 FCFE Excess Cash Intangibles

Assets

Intangibles% add

to DCF

Default Value 308.43 151.85 0%

Custom Value 50.00%

Projection of Future Free Cash Flow (Base Line - 8%)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Yearly Growth

Future Value 164.00 177.12 191.29 197.56 211.00 225.35 240.67 231.99 244.61 257.91

Discounted

Perpetuity Value

1,558.24 1,370.19 950.36

Present Value 2,171.46 2,228.70 2,296.84

3-Y 5-Y 10-Y

Shares Outstanding

7.04 7.23 7.45

5.85 6.01 6.19

66% 67% 68%

Projection of Future Free Cash Flow (Good Scenario - 12%) 12%

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Yearly Growth

Future Value 170.07 190.48 213.34 223.95 246.79 271.96 299.70 284.42 307.62 332.73

Discounted

Perpetuity Value

1,737.86 1,602.63 1,226.03

Present Value 2,382.86 2,529.98 2,759.68

3-Y 5-Y 10-Y

Shares Outstanding

7.73 8.20 8.95

6.42 6.82 7.44

69% 71% 73%

Current Price

Actual M.O.S.

2.4

308.43

Fair Value

17%

Buy Under

Desired M.O.S.

7.19% 3.44%

188.05

308.43

17%

Fair Value

0.96 0.9210.63%

19%5% 0.96 0.92

Current Price

Actual M.O.S.

2.77

Buy Under

2.4

Desired M.O.S.

Projection of Future Free Cash Flow (Bad Scenario - 4%) 4%

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Yearly Growth

Future Value 157.93 164.24 170.81 173.58 179.48 185.59 191.90 188.22 193.34 198.60

Discounted

Perpetuity Value

1,391.43 1,165.54 731.79

Present Value 1,974.39 1,960.66 1,917.41

3-Y 5-Y 10-Y

Shares Outstanding

6.40 6.36 6.22

5.32 5.28 5.17

63% 62% 61%

Projection of Future Free Cash Flow (Ugly Scenario - 0%) 0%

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Yearly Growth

Future Value 151.85 151.85 151.85 151.85 151.85 151.85 151.85 151.85 151.85 151.85

Discounted

Perpetuity Value

1,236.98 986.11 559.55

Present Value 1,791.14 1,722.94 1,606.98

3-Y 5-Y 10-Y

Shares Outstanding

5.81 5.59 5.21

4.83 4.64 4.33

59% 57% 54%Actual M.O.S.

308.43

Fair Value

17%

Buy Under

Current Price 2.4

Desired M.O.S.

17%

Buy Under

Current Price

Actual M.O.S.

2.4

Desired M.O.S.

308.43

Fair Value

Notes

Created Date Note

18/06/2013 Absolute P/E is not applicable due to inconsistent EPS growth.