KAPCO has posted its results for 1H 2011. The resutls are exactly as per expectations but before proceeding to results just see what I posted on Jan 10, 2011.

"The company pays out all what it earns, however due to circular debt issue, it is not expected to continue this 100% payout for the next year but still the payout is expected to be much better than most of the stocks in KSE 100. Its next year expected EPS is 7.5 - 8, and dividend is expected to be PKR 5.5 - 6 which means payout of around 75%. The current price of share is around PKR 44 and the target price is expected to be PKR 52, so the P/E of share is 5.9 (market has a P/E of around 8), dividend yield is around 12.5% and an upside of 20%. I think it is a good share to buy right now."

As per the result, company earned PKR 3.85 billion (EPS: 4.37) as compared to PKR 2.72 billion (EPS: 3.09) over the same period last year. The results improved by 61%, but this improvement was expected as can be seen above that full year expectation of EPS is 7.5-8 and after the half yearly results, we can see that company can achieve these expectations. However, there is a good news about dividend as well as company announced an interim divident of PKR 3 which means pay out of 69% not bad given the fact that company is having exposure to circular debt issue. There is one more good news, company's share is still trading at around PKR 42 so what you need to do is grab this share as soon as possible. The relevant data is as follows:

Target Price = 52

Current Price = 42

P/E = 5.25

Divident Yield = 14%

Total expected return = 23.8%+14% = 38%