TChong's net profit jumped 42% q-o-q or 35% y-o-y to RM74 million while its turnover increased by 35% q-o-q or 30% y-o-y to RM1.13 billion. Turnover jumped as a result of the introduction of the Nissan Teana executive saloon in November 2010, with the full impact of the sales of Teana was booked in QE31/3/2011. Due to higher sales & higher value added product offering, TChong enjoyed an improvement in its operating profit margin, which rose from 8.5% in QE31/12/2010 to 9.6% in QE31/3/2011. This favorable factors have more than offset the forex translation suffered by its Vietnam subsidiary (due to the devaluation of the Vietnamese Dong) as well as unfavorable forex movement in general.
Table: TChong's last 8 quarterly results
Chart 1: TChong's last 20 quarterly results
Valuation
TChong (closed at RM4.30 yesterday) is now trading at a PE of 11.7 times (based on last 4 quarters' EPS of 36.64 sen). At this PE multiple, TChong is deemed fairly valued. However, TChong's earning could continue to grow as its venture in Indochina is in an infancy stage.
Technical Outlook
TChong's share price has corrected quite a bit since the call to take profit on this stock in December 2010 (here). TChong has broken below its uptrend line as well as the horizontal support at RM4.50. There is no sign yet of a bottom-building phase in progress. The next support will be the psychological RM4.00 level.
Chart 2: TChong's weekly chart as at May 16, 2011 (Source: Tradesignum)
Chart 3: TChong's monthly chart as at May 3, 2011 (Source: Tradesignum)
Conclusion
With the sharp jump in its top-line & bottom-line in QE31/3/2011, I think TChong is worth close tracking. A bottom-building phase could set around the RM4.00-4.50 level. At this level, slow accumulation may not be a bad idea.
2 comments:
Hi Alex
Just wonder why market is selling Ivory below IPO price, i’ve no idea what trigger this selloff. Financially, Ivory perform in line with expectation, trading at PE<4.5x. I also visit its website and get to know almost all its properties launch are very well received, fully sold in some of the project and its flagship, Penang time square also have boosted occupancy rate from 50% to 80% now. Just could'nt justify current selloff trading below IPO price!?
Hi hng
Ivory is a profitable property developer with net profit of RM36 mil & a turnover of RM165 mil for FY2010. EPS for FY2010 amount to 22.4 sen.
Ivory (at RM0.97) is now trading at a PE of 4.4 times or at a Price to Book of 0.94 time. As such, Ivory is quite attractive.
Chartwise, Ivory has been sliding since its listing. It is in a downward channel with support at RM0.88 & resistance at RM1.12.
I do not know why Ivory is sliding lower despite the good property market performance & attractive valuation. Normally, when I see something like this, the first question that I would ask is why is the major shareholder(s)- the people who know(s) best about the company- not buying more aggressively if the stock is so good & attractive. After studying the Changes in Shareholding, we noted that there were aggressive selling by EPF and some buying by one Dato Low (presumably the major shareholder) up to March this year. Why is EPF selling off its stake in Ivory, when it has been building up its portfolio of investment properties, as reported by the newspaper recently? It ceased to be a substantial shareholder in Ivory in March. Dato Low has ceased buying Ivory shares since March. Why? More questions left unanswered.
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