LTKM Bhd ('LTKM') is engaged in operation of a poultry farm for the production and sale of chicken eggs, chickens and organic fertilizers, and extraction and trading of sand.
Recent Financial Results
Its results for QE30/9/2009 was very good. Its net profit increased by 24.3% q-o-q or 188% y-o-y to RM5.7 million, while turnover was relatively unchanged at RM35 million. The increased net profit was attributable to lower raw material cost & government incentive received of RM1.87 million during the quarter (compared to none previously).
Table 1: LTKM's 8 quarterly results
Chart 1: LTKM's 12 quarterly results
Valuation
Based on its closing price of RM1.29 today & the last 4 quarters EPS of 45 sen, LTKM is now trading at a PE of 2.9 times only. Its price to book ratio is also very low at 0.5 times. All in all, LTKM is a very attractive poultry stock.
Technical Outlook
LTKM is in a short-term uptrend. If we used the 100-day SMA line as the uptrend line, then the support is at RM1.20 (see Chart 2). However, LTKM is a range-bound stock, trading mostly between RM1.00 & RM1.30. In good time, it shot above RM1.30 to hit highs of RM1.60 and, in bad time, it had dropped to RM0.80.
Chart 2: LTKM's daily chart as at Dec 2, 2009 (Source: Quickcharts)
Chart 3: LTKM's weekly chart as at Dec 1, 2009 (Source: Tradesignum)
Conclusion
Based on cheap valuation & improving performance, LTKM could be a good stock for medium-term investment.
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