TWS reported a disappointing results for QE31/3/2011. Its net profit 54% q-o-q to RM90 million on the back of a 8%-decline in turnover to RM1.46 billion. The decline in profitability was mainly due to lower production of fresh fruit bunches which is a norm in the oil palm industry in the early part of the year and lower contribution from Sugar Division.
Table: TWS's last 8 quarterly results
Chart 1: TWS's last 11 quarterly results
Valuation
TWS (closed at RM9.33 today) is now trading at a PE of 5.5 times (based on last 4 quarters' EPS of 169.74 sen). Based on this PE multiple, TWS is still very attractive.
Technical Outlook
A short-term downtrend has formed, with the presence of a lower 'low' which preceded a lower 'high'. TWS could find support at the 30-day SMA line at RM9.00 or the breakout level of the last rally (at RM8.00-8.10).
Chart 2: TWS's daily chart as at May 31, 2011 (Source: Quickcharts)
Conclusion
Based on attractive valuation, TWS is still considered a good stock for long-term investment. However, the poor financial performance- due to seasonal factor- and the poor short-term technical outlook should see the stock correcting further.
3 comments:
hi alex i still holding twscorp because of tws rally last week. since twscorp will be giving 0.5 sen per share next month which i think it's very attractive so i decided to hold it.
do u think worth to hold?
Hi RedsArmy
TWSCorp is in an upward channel. One can also draw another parallel line right in the middle of the upward channel. TWSCorp moves in between these 3 lines and uses them as support & resistance accordingly. For example, at this moment, the middle line is at RM0.95, while the upper & lower boundary are at RM1.20 & RM0.70, respectively. The middle line would now act as a resistance. If need be, the RM0.70 level would act as a support.
In addition, TWSCorp has a horizontal support at RM0.80 & horizontal resistance at RM1.00.
Now that you have all these lines & numbers (if you are still with me), the outlook is this: TWSCorp is more likely to drift lower- possibly testing the RM0.80 support- since it had just broken below the RM0.95 support-turned-resistance level. For it to go higher, it has to overcome the RM0.95 resistance. If that is successful, it may test the RM1.00 resistance.
The above cautious technical outlook is for the short-term (over the next few weeks). The long-term outlook is still positive as the stock is in an upward channel. If you don't fret about the paper loss of 10 sen, then you can just hold the stock & wait for a rebound which could take the stock to the RM1.20 level. That would be a excellent level to sell!
Thank you so much for your precious analysis. I will monitor closely and wish it can break that 0.95 resistance and go higher.
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