Monday, April 13, 2009

NSTP- a quick look

Background

Like many stocks in the market, NSTP has recovered somewhat in the past few weeks. Recent purchasers of this stock may be attracted to its First & Final dividend of 8 sen which will go ex on April 28th.

Financial Results

NSTP, the publisher of the second largest-circulation English daily in Malaysia (New Straits Times), has been struggling to recapture its glory days after its main paper being dethroned by its rival, the Star. Looking at the last 8 quarters' results, I would say that NSTP's financial performance has shown steady improvement (see Table 1). This is consistent with its performance for the last 5 years' results (see Table 2).


Table 1: NSTP's 8Qs


Table 2: NSTP's last 5-year Financial Highlights

Financial Position

NSTP's financial position is satisfactory as at 31/12/2008. Current ratio is adequate at 1.8 times. Gearing ratio is low as borrowing is negligible (about RM29.5 million against Shareholders' Funds of RM985 million).

Valuation

Based on the last 4 quarters' EPS totaling 22 sen, NSTP- closed at RM1.19 at the end of today's morning session- is now trading at a trailing PE of 5.4 times. I think NSTP is fairly attractive at this PE multiple.

Technical Outlook

The stock seems to have completed a rounding bottom at about the RM1.00 level. It has broken above its immediate downtrend line at RM1.05 level but has yet to break above its medium-term downtrend line, with resistance at RM1.50-55 level.


Chart: NSTP's weekly chart as at 10/4/2009 (Source: Quickcharts)

Conclusion

Based on undemanding valuation, improved financial performance & more positive technical outlook, NSTP could be a good stock for long-term investment.

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