CI Holdings Bhd ('CIHLDG') is invoolved in the followings businesses: Beverage and Building & construction related products. The main excitement is in the Beverage business, which is carried out by its subsidiary, Permanis Sdn Bhd. Here, it has a balanced portfolio of products, including refreshing carbonated beverages, such as Pepsi, 7Up, Mirinda, Evervess, Frost, Kickapoo; zero sugar/ zero calorie carbonated beverages, such as Pepsi Max and Pepsi Light; energy drinks; coffee; water; tea; isotonics, and juice.
Recent Negative Factor
Effective from 1st of January 2011, the Government has disallowed the big beverage companies- such as CIHLDG, peers, from purchasing subsidized sugar. This change in policy increased the cost of sugar by 38% overnight. Here is an interesting article on CIHLDG & how it is trying to cope with the higher cost of sugar.
Recent Financial Results
Because of the above government move, the bottom-line of CIHLDG suffered a sharp drop in QE31/3/2011. Net profit dropped by 27% q-o-q or 25% y-o-y to RM8.2 million while turnover was relatively unchanged at RM140 million (dropped 4.5% q-o-q or 1.7% y-o-y). This twin opposite effect means that the company suffered a drop in sales while trying unsuccessfully to reduce the margin erosion.
Table 1: CIHLDG's last 8 quarterly results
Chart 1: CIHLDG's last 12 quarterly results
Financial Position
CIHLDG is in a fair satisfactory financial position as at 31/3/2011. Its current ratio stood at 1.37 times while its debts to equity stood at 0.74 times. The latter may appear elevated but it is quite acceptable for a trading company.
Valuation
CIHLDG (closed at RM2.65 yesterday) is now trading at a PE of 11.5 times (based on annualized EPS of 23 sen). At this multiple, CIHLDG is deemed fairly valued. If the results for the next quarter shows that the company can maintain its top-line & bottom-line numbers, I think the share price should begin to recover.
Technical Outlook
CIHLDG rose from RM1.00 in mid-2009 to a recent high of about RM3.94 in November 2010. A retracement of 50% would put the stock at RM2.45-2.50. From the chart below, we can see that the horizontal line of RM2.45 was recently tested & the stock recovered from it. The immediate resistance is from the horizontal line at RM2.70.
Chart 2: CIHLDG's weekly chart as at May 11, 2011 (Source: Quickcharts)
Conclusion
Based on reasonable valuation- after the recent sharp correction- CIHLDG can be a good stock to consider for long-term investment. To be sure, you may want to wait for another quarter of financial results or better technical reading before buying in earnest.
11 comments:
Hi Alex,
When is your estimated time that the CIHLDG next quarter report will out?
How about SPRTZR and YHS? The quarterly report of YHS seem good.
Thanks in million.
hi Alex,
could you pls comment on Hap Seng? Whether it's good idea to buy into it for its upcoming corporate exercise?
thanks
maxwealth88
Alex, you have forgotten to mention the racism issue by its MD. As far as I know, a lot of non-malay investors are still boycotting this stock as well as not buying any of its drinks. Although, I'm not sure if this is the reason for the stock to be laggard.
Hi Alex,
What is your opinion on YHS and GTRONIC? Both stock is giving dividen but GTRONIC is falling albeit the company CEO and EPF is acquiring the share.
Thank you very much.
Hi Alex
Can you give some opinion on current Mah Sing price movement and its prospect?
Tx!
Alex,
Please comment on TWS and it's move on Friday. Much appreciated. Thanks.
can u comment on bstead and kfc/qsr? tq
Hi nightradersdk
My take on the following:
1) Bstead's price movement seems to be trapped within a rising wedge, with support & resistance at RM5.45 and RM6.00 respectively. Against an upward bias in the price movement, we can see that the MACD & RSI are moving lower: thus giving a bearish divergence. The overall feeling is that Bstead is very toppish.
2) KFC may have broken above a triangle at RM3.75-3.80. Its next resistance is the psychological RM4.00 level.
3) QSR may revisit its recent high of RM6.10-6.13. Since this is also an all-time high, it could be very tricky. An upside breakout above this level would be very positive, while the opposite would be negative.
Hi Brita
TWS is probably benefiting from the drop in the raw sugar prices and the government's decision to raise the controlled price of sugar in Malaysia. However, I am not too sure how it can benefit in this arrangement. One can't be in a situation where 'head' you win (TWS makes more profit), 'tail' the the other guy loses (because government has to pay higher subsidy).
Hi luckystock2
Mah Sing is now trading at an all-time high. It has many development projects and it is still aggressively buying development land. Recent acquisitions are in Batu Ferringhi, Penang; Cyberjaya; and Ampang.
Mah Sing is trading at a trailing PE of 18.5 times. This however may not be a good indication as a substantial portion of its sales may not have been booked in.
The big question is whether the strong residential properties can sustain in the future. Many of the residential developments are now in the medium to high end which may see some consolidation if the economy were to soften.
As such, I believe we should buy only when the price has pulled back from the current level. A good entry level could be the 100-day SMA at RM2.43 or even the 200-day SMA at RM2.22.
Hi Chun Mun
My take on the followings:
1) YHS is an upward channel for the past 3 years. The upside boundary is RM2.00 while the support from the uptrend line is at RM1.40-1.50.
Based on the last 2 quarters' EPS of 4.6 sen (up to 31/3/2011), YHS's PE is calculated to be about 20 times. As such, it is fully valued.
2) GTRONIC broke above its long-term downtrend line at RM1.15-1.20 in March 2010. It hit a high of RM1.62 in April 2010 & since then, it has been drifting lower. The support from the LT downtrend line could provide support at about RM0.80.
Based on the last 2 quarters' EPS of 5.5 sen (up to 31/3/2011), Gtronic's PE is calculated to be about 9.4 times. While it is trading at a lower PE than YHS, its valuation is not cheap for a semiconductor (given the current uncertainty in this sector).
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