Wednesday, April 18, 2012

Tongher poised to next upleg?

Results Update

UOADEV reported its results for QE31/12/2011on February 27. Its net profit increased by 107% q-o-q or 22% y-o-y to RM8.4 million while its pre-tax profit dropped 15% q-o-q or 32% y-o-y to RM6.6 million. This group enjoys lower effective tax rates due to higher profit contribution from a foreign subsidiary which enjoyed from tax-free benefits. Revenue declined 3% q-o-q but rose 14% y-o-y to RM144 million.

Table: Tongher's last 8 quarterly results

Chart 1: Tongher's last 29 quarterly results

Financial Position

Tongher is in a healthy financial position as at 31/12/2011, with current ratio at 2.48 times and gearing ratio at 0.31 time.


Tongher (closed at RM2.39 yesterday) is now trading at a PE of 8.2 times (based on last 4 quarters' EPS of 29 sen). At this PE multiple, Tongher is deemed fairly valued.

(Note: The company has proposed a 1st & final dividend of 22 sen for FY2011. The entitlement date for this dividend has not been fixed yet.)

Technical Outlook

From the weekly chart below, we can see that Tongher appears to have broken above its intermediate downtrend line at RM2.20 in February. However, it has yet to break above its long-term downtrend line at RM2.45-2.50 (see the monthly chart). A breakout of this downtrend line could be the start of Tongher's long-awaited upleg.

Chart 2: Tongher's weekly chart as at April 17, 2012 (Source: quickcharts)

Chart 3: Tongher's monthly chart as at April 17, 2012 (Source: Tradesignum)


Based on improving financial performance, healthy financial position, reasonable valuation & nice technical set-up, Tongher could be a good stock for long-term investment. You may buy on weakness if the stock drift back towards the RM2.00 level or on breakout above the RM2.50 level.


cheer said...

Hi Alex

Any comment on Ptaras?

b said...

dear alex,

canone has fared better than kianjoo in the first quarter. the outlook for kianjoo is really long term, and eat dividend. what do u advice on kianjoo for now

Alex Lu said...

Hi cheer

Ptaras is still in an upward channel, with support at RM2.20 & resistance at RM3.10. Please check on the fundamentals by visiting Bursa website.

Alex Lu said...

Hi b

Canone is likely to rie further since it broke above the psychological RM2.00 mark.

Kianjoo is now resting on a more gradual uptrend line, with support at RM1.95. If that support is violated, it may find support at RM1.85 & then at RM1.70. Kianjoo's recent results has been a bit disappointing. In addition, some funds may decide to exit the stock since the management is likely to change with Canone coming in as the substantial shareholder in place of the See family. At the present price level, I think Kianjoo is a HOLD but you may want to reduce your position if it inched up to RM2.15-2.20.