Fimacor- Top-line & bottom-line slid further

Results Update

Fimacor reported another disappointing quarterly results for QE31/12/2011. Its net profit dropped 33% q-o-q or 51% y-o-y to RM11 million while its turnover dropped by 11% q-o-q or 12% y-o-y to RM67 million (see table 1). The q-o-q decline was due to a drop in the segmental results for the Security printing segment of RM10.7 million. For more on the segmental results for the past 3 quarters, see Table 2. What is most noticeable is the poor performance of the Oil palm prodution & processing segment, which is contrary to the gung-ho performance of other oil palm players.


Table 1: Fimacor's last 8 quarterly results



Table 2: Fimacor's last 3 quarterly segmental results



Chart 1; Fimacor's last 17 quarterly results

Valuation

Fimacor (closed at RM6.23 today) is trading at a PE of 7 times (based on last 4 quarters' EPS of 89 sen). At this PE, Fimacor's valuation is deemed demand.

Technical Outlook

Fimacor broke the horizontal support at RM6.50 today. Its next support will be the psychological RM6.00 level & then the horizontal support at RM5.70.


Chart 2: Fimacor's weekly chart as at Feb 2, 2012 (Source: Tradesignum)

Conclusion

Based on undemanding valuation, Fimacor is still a good stock for long-term investment. However, the surprisingly poor performance of its oil palm division is a concern. I would rate this stock a HOLD or a BUY ON WEAKNESS, say ay RM5.70-6.00.