This is a personal weblog, reflecting my personal views and not the views of anyone or any organization, which I may be affiliated to. All information provided here, including recommendations (if any), should be treated for informational purposes only. The author should not be held liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.
Thursday, August 18, 2011
Petgas- bottom-line recovered
Results Update
Petgas has just announced its results for QE30/6/2011. Its net profit increased by 45% q-o-q to RM387 million on the back of a small 3%-increase in turnover. The improvement was attributed to lower cost of revenue. Compared to the same quarter last year, Petgas's net profit was up only by 1% on the back of a 5%-increase in turnover.
Table 1: Petgas's last 8 quarterly results
Chart 1: Petgas's last 20 quarterly results
Chart 2: Petgas's profit margin over the last 20 quarters
Valuation
Petgas (closed at RM13.54 yesterday) is now trading at a PE of 15.6 times (based on last 4 quarters' EPS of 72.93 sen). Based on this multiple, Petgas is deemed fully valued. As noted earlier, Petgas has a few big projects in hand which could boost its top-line & bottom-line significantly. These projects may only come on-line over the next 2 years.
Technical Outlook
Petgas had a sharp drop during the recent selldown. It tested its 100-day SMA line support at RM12.20. The stock has a very strong horizontal support at RM12.00. It had since rebounded & surpassed its horizontal resistance at RM13.50-13.60. It may re-test its recent high of RM14.00.
Chart 3: Petgas's daily chart as at Aug 17, 2011 (Source: Tradesignum)
Chart 4: Petgas's monthly chart as at Aug 1, 2011_plotted on log scale (Source: Tradesignum)
Conclusion
Based on fully valuation, I would maintain my earlier rating for the stock which is to sell into strength. While Petgas has a few exciting projects in the pipeline, these projects may only kick in over the next 2 years. This conservative approach would serve us better given the poor market sentiment & the challenging economic conditions, both locally & globally.
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