Hume's net profit jumped

Hume has just reported its results for 3Q2008 ending 31/3/2008. Its net profit jumped by 37.5% q-o-q or 215% y-o-y to RM47.2 million while turnover increased by 8.5% q-o-q or 19.0% y-o-y to RM187 million. The big boost to its profitability came mainly from the increase in its Share of Profit of Associates, where the main contributor is its 39%-owned associate, Southern Steel, which is involved in steel production.



Hume (closed at RM4.20 as at May 26th) is now trading at a trailing PE of 5.5 times (based on its last 4 quarters' EPS totaling 77 sen) or at a P/Book of 0.9 times (based on its NTA per share of RM4.20 as at 31/3/2008). At these multiples, Hume is deemed inexpensive.

From the chart below, we can see that Hume's long-term uptrend (starting from November 1998) is being impeded by the medium-term downtrend line (starting from January 2004). Hume need to break above the latter at RM4.60 in order to revisit its all-time high of RM5.60.


Chart: Hume's monthly chart as at May 26, 2008 (source: Quickcharts)

Based on attractive valuation, Hume could be a good stock for medium-term investment.