Friday, July 06, 2012

Adventa has broken above its downtrend line

Results Update

Adventa had recently announced its results for QE30/4/2012. Its net profit increased by 127% q-o-q or 34% y-o-y to RM6.1 million while revenue inched up 2.7% q-o-q or 2.2% y-o-y to RM107 million. The company attributed the improvement to better margins and revenue from the synthetic glove segment & better cost control.

Table: Adventa;s last 8 quarterly results

From the chart below, we can see the slide in Adventa's bottom-line has finally reversed upward. From favorable movement in the prices of raw material & the strengthening of the USD, this trend is expected to continue.

Chart 1: Adventa's last 29 quarterly results


Adventa (closed at RM1.61 yesterday) is now trading at a forward PE of 10 times (based on annualized EPS of 16.1 sen). At this PE, Adventa is deemed fairly valued and potential for limited upside.

Technical Outlook

Adventa has broken above its 2-year old downtrend line at RM1.50. With this breakout, Adventa may move sideway with the RM1.50 acting as a support or even commence on its next upleg.

Chart 2: Adventa's weekly charta s at July 5, 2012 (Source: Tradesignum)


Based on improved financial performance & technical outlook, Adventa could be a good stock for long-term investment. However, we will have to wait for a strong pick-up in its bottom-line to fire up a rally in this stock as the valuation is deemed nearly fully-valued.

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