Tuesday, August 23, 2011

QL- past performance may not sustain


Results Update

For QE30/6/2011, QL's net profit dropped by 12% q-o-q to RM28 million on the back of a 10%-decline in turnover to RM455 million. Despite the strong performance from the Oil Palm division, QL's top-line & bottom-line declined q-o-q due to poorer performance from the Marine Products & Integrated Live-stocks divisions.


Table 1: QL's sales & pre-tax profit for QE30/6/2011, q-o-q comparison

When compared to the same quarter last year, QL's net profit increased by 4% while turnover improved by 18%. Again, the contribution came mainly from the Oil Palm division.


Table 2: QL's sales & pre-tax profit for QE30/6/2011, y-o-y comparison



Table 3: QL's last 8 quarterly results



Chart 1: QL's last 13 quarterly results



Chart 2: QL's profit margin for last 13 quarterly results

Valuation

QL (closed at RM2.98 yesterday) is now trading at a a PE of 22.3 times (based on the annualized EPS of 13.36 sen). At that PE multiple, QL is overvalued.

Technical Outlook

QL is looking very toppish. It has broken below its 10-month SMA line at RM3.06. Its MACD is poised to do a negative crossover, which would generate a SELL signal for the stock. If that were to happened, QL could drop further, possibly testing its 20 or even 30-month SMA lines at RM2.55 or RM2.15, respectively.


Chart 3: QL's monthly chart as at Aug 1, 2011_plotted on log scale (Source: Tradesignum)

Conclusion


Based on high valuation & weakness in its technical outlook, I think one should take profit on this stock, which had risen substantially over the past ten years.

2 comments:

Anonymous said...

Hi Alex

Why MNRB trading at such deep discount valuation, based on its Q1 result of 20sen, annualized EPS at 80sen, its current PE is at 3.75x !! MNRB also trade cum dividend of 20sen, or yield of 6.7%. What could be possible explanation for such cheap valuation?

Alex Lu said...

Hi hng

MNRB has disappointed so often over the past few years that investors would always wary of the good results. The other thing is that the world has been inundated with disasters over the past few months that one could not help but be a bit careful in placing a valuation on MNRB. Having said that, the nagatives could have been over-factored into the price, which could mean that MNRB is really a safe BUY at the current level.

Chartwise, the stock looks very promising. However, the volume is very low, which is not convincing.