Wednesday, December 02, 2009

LTKM- an attractive poultry stock

Background

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.

No comments: