F&N has just announced its results for QE31/12/2009. Its net profit increased by 27.3% q-o-q or 52.6% y-o-y to RM77.7 million while turnover increased by 9.2 % q-o-q or 8.1% y-o-y to RM992 million. The improved performance was attributable to 12% y-o-y growth in sales of the Soft Drinks division and 8% y-o-y growth in the Dairies division. F&N's latest results shows that its growth trend has not hit a plateau, contrary to my concern in the last post (here).
Table 1: F&N's 8 quarterly results
Chart 1: F&N's 13 quarterly results
Despite the recent increase in the cost of raw material (such as milk powder, sugar & aluminium), F&N is cautiously optimistic that the year;s performance.
Valuation
Assuming that F&N can maintain its latest quarterly performance for the next few quarters, then it may achieve a full-year EPS of 87 sen. F&N (closed at RM10.50 yesterday) would then be trading at a PER of 12 times. For a multinational company involved in consumer stable product, F&N may command a PER of 15 times. Thus, its fair value should be closer to RM13.00.
Technical Outlook
As noted before, F&N is in an uptrend line, with support at RM9.00. It should have very good support at the psychological RM10.00 level, which is also the 50-week SMA line.
Chart 2: F&N's weekly chart as at Feb 10, 2010_12.30pm (Source: Quickcharts)
Conclusion
Based on good financial performance, attractive valuation & positive technical outlook, F&N is a good stock for long-term investment.
4 comments:
Hi Alex,
MAS dropped so much recently. It reach 2.04 now. Base on OSK research, MAS will drop to 2.00. DO you think it will drop further or stay at 2.00 ?
Rgds,
KH CHAN
Hi David,
A reader asked me about MAS earlier today. I will give you the same reply:
"Since MAS is now dropping to its strong horizontal support of RM1.90-2.00, it does not make sense to sell it. It may make more sense to buy at RM1.90-2.00 & then wait for a rebound.
In technical analysis, one buys at the support but sells if the stock had broken below the support. Alternatively, one sells at a resistance or buys if the stock had broken above the resistance."
Hi Alex,
MAS right issue is at 1.60. Maybe i will wait it drop to 1.60 and buy. What do you think ?
Rgds,
David
Hi David,
MAS's immediate horizontal support is at RM1.90-2.00. MAS-OR, which is currently trading at RM0.15, may offer investors an opportunity to get into MAS at RM1.75 (by buying MAS-OR at RM0.15 & subscribing for the Rights Issue at RM1.60).
I don't think MAS will drop to RM1.60 as it is likely to enjoy support by some local funds. If it does happen, the acceptance of the Rights Issue would be affected.
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