KFima- a good stock for trading & long-term investing

Background

Kumpulan Fima Berhad ('KFima') is an investment holding company with subsidiaries involved in producing and trading security and confidential documents; operating estate, cattle farming, manufacturing and packaging food products; providing bulk handling and storage of liquid products and cargoes, warehousing and transportation and customs forwarding services, international trading, investment holdings and management of commercial properties.

Recent Financial Results

KFima's net profit increased by 9.1% q-o-q or 85.0% y-o-y to RM18.5 million while turnover increased by 21.0% q-o-q or 0.5% y-o-y to RM92.7 million. The detailed financial statement which was attached to the August 20, 2009 results announcement is displaying an error message. Without the benefit of looking at the detailed financial statement, it is hard to gauge what might have brought about the improved bottom-line. I believe that the improved performance is the results of better CPO prices. KFima's pre-tax profit has also benefited from capital gain of RM5.25 million from the disposal of Banding Island Resort (Source: Business Week).


Table 1: KFima's 8 quarterly results

A look at KFima's last 16 quarterly results shows steady growth in its bottom-line. Top-line dropped back significantly in QE31/3/2009 but this has stabilized in QE30/6/2009.


Chart 1: KFima's 16 quarterly results

Valuation

KFima (closed at RM0.765 as at September 11) is now trailing trading at a PE of 4.3 times (based on EPS of 18 sen, excluding the capital gain of RM5.25 million from the disposal of Banding Island Resort in QE30/6/2009). Price to book is at 0.6 times (based on NTA per share of RM1.37 as at 30/6/2009). At these multiples, KFima appears very attractive.

Other Information

KFima is one of 8 companies in Malaysia that made it to Forbes' Asia Top 200 Best Companies with Turnover of Under USD1 billion. For more, go here.

Technical Outlook

KFima is rising in a short-term uptrend line since March this year. The share price has been consolidating in a descending triangle pattern for the past 6-7 weeks. On Friday, it appeared to have achieved an upside breakout at RM0.76-77, but it closed at the breakout level of RM0.765. If the stock can recruit further buying support in the days ahead, the breakout could lead to a good rally to RM0.90-1.00.


Chart 2: KFima's daily chart as at Sept 11, 2009 (Source: Quickcharts)


Chart 3: KFima's monthly chart as at Sept 11, 2009 (Source: Quickcharts)

Conclusion

Based on good financial performance, attractive valuation & potential bullish technical breakout, KFima could be a good stock for both a trading Buy and a long-term Buy.