Lonbisc's top-line & bottom-line dropped on q-o-q basis

Results Update

For QE30/9/2009, Lonbisc's net profit dropped by 52.7% q-o-q to RM3.2 million on the back of a 15.3%-decline in turnover to RM46.7 million. Compared to the corresponding quarter last year, its net profit was up 27.1% while turnover was higher by 19.5%. No reason was given for the drop in top-line & bottom-line vis-a-vis the immediate preceding quarter. However, it was noted previously that the company's results soared in QE30/6/2009 due to the incorporation of Khee San;s results into its book. As Khee San remained a part of Lonbisc group in QE30/9/2009, there must be other reason for the drop in both top-line & bottom-line. The only note made in the accounts was "the results was in line with expectation"- a really useful point, indeed.


Table 1: Lonbisc's 8 quarterly results


Chart 1: Lonbisc's 19 quarterly results

Valuation

Lonbisc's full-year EPS must be revised to 21 sen (based on its last 4 quarters' EPS). Based on its closing price of RM1.04 yesterday, Lonbisc is now trading at a PE of about 5.0 times. Its Price to Book is about 0.5 times (based on NTA per share of RM2.12 as at 30/9/2009). Despite the downward revision in the EPS, Lonbisc is still an attractive consumer stock.

Technical Outlook

Lonbisc's recent short-term uptrend may be ending soon (see Chart 2). In addition, it is still in long-term downtrend line, with resistance at RM1.10 (see Chart 3). So, from a technical perspective, Lonbisc is not an exciting stock.


Chart 3: Lonbisc's daily chart as at Dec 2, 2009 (Source: Tradesignum)


Chart 3: Lonbisc's monthly chart as at Dec 2, 2009 (Source: Tradesignum)

Conclusion

Based on attractive valuation, Lonbisc may be a good stock for long-term investment. Its most recent quarterly results has been somewhat disappointing. This, together with the poor technical outlook, would mean this stock will stay an under-performer for a while longer.