MISC has just announced its results for QE30/6/2010. Its net profit increased by 118% q-o-q or 83% y-o-y to RM428 million while turnover dropped 1% q-o-q or 16% y-o-y to RM3.27 billion. The improved performance is attributed to better results from the restructured Liner business as well as increased profitability from the Heavy Engineering business.
Table: MISC's last 8 quarterly results
From Chart 1 below, we can see that MISC's turnover has stabilized after a sharp drop in 2008. Bottom-line has shown signs of recovery in the past 3 quarters.
Chart 1: MISC's last 17 quarterly results
Valuation
MISC (closed at RM8.86 yesterday) is now trading at a trailing PER of 42 times. At this multiple, MISC is deemed overvalued.
Technical Outlook
Like a giant oil tanker, MISC moved very slowly. Over the past 18 years, MISC had only rallied twice. Its first rally came at the end of the 1993 bull run and the next bull rally came in 2003-2006. The periods in between are marked by long sideway movement or consolidation (in the form of triangle or double-triangle). I believe MISC is now in such a formation, with prices trapped between RM8.00 & RM10.00.
Chart 2: MISC's monthly chart as at Aug 19, 2010 (Source: Tradesignum)
Conclusion
Based on high valuation & unattractive technical outlook, MISC is a stock to be avoided.
11 comments:
Hi Alex,
Remember you posted some comments about OGAWA some days back.Now that their results are out,what is your current take on it?Thank you in advance for your insights.
Hi Alex,
Do you think OGAWA's latest QE30/06/10 result good enough for a rally?
Hi Alex,
How do you find Tasek Corporation Bhd after the recent capital repayment and consolidation exercise ?
Hi Alex,
What are your views on SEB (Seremban Engineering Berhad), a subsidiary of success berhad.
Hi Alex,
Now is near mooncake festival, please comment for Oversea, i see this stock may be bullish breakout.
Thank you.
pls comment on taking over of p&o by prudential because it reminds me the two stocks which were recommend to buy buy kenanga asiaep and karensoft now already delisted
Hi newbie & Triple_C
See my post on Ogawa today.
Hi NGU
Tasek is a profitable company, making about RM18-19 million each quarter. In addition, its operation generates cash of RM45 million per quarter. As such, its full year EPS is about 58 sen & its operating cashflow is about RM1.45 per share.
It is also a very cash rich company, with each share having a cash backing of RM2.50. If you were to deduct the cash from the share price of RM6.62, Tasek at the adjusted price of RM4.12 would have a trailing PER of 7 times. Another way of looking at it is that Tasek can generate cashflow equivalent to its present share price over a period of 2.84 years- like a payback period.
Based on the above, I believe Tasek is a good BUY at the present price. Technically, it may slide back to RM5.00-5.50, which would make it an even better BUY.
Hi kian
There is not much that I can add to the matter of P&O's possible sale to Prudential. Will it happen? Who knows... At what price the deal will be done? I don't know. The market knows better & it has already factored in the potential price, after some adjustments for risk, etc.
Hi Ethan Lee
Like other newly listed stocks, Oversea had a rally on Friday. Is this the beginning of more upside? We don't know. We only have one quarterly results for this stock where it reported a net profit of RM1.5 million. On an annualized basis, its full year EPS is about 2.4 sen. At RM0.19 now, Oversea is trading at a PER of about 7.9 times. I think Oversea is fully valued & has very limited upside.
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