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Thursday, August 09, 2012

KKB hanging on the strong support of RM1.45

Results Update

For QE30/6/2012, KKB's net profit dropped by 52% q-o-q or 68% y-o-y to RM3.7 million while revenue declined by 36% q-o-q or 25% y-o-y to RM34 million. Top-line & Bottom-line declined due to the drop in revenue for the Engineering & Manufacturing segments.


Table: KKBt's last 8 quarterly results


Chart 1: KKB's last 20 quarterly results

Valuation

KKB (closed at RM1.45) is now trading at a PE of 14.5 times (based on last 4 quarters' EPS of 10.33 sen). At this PE, KKB is deemed overvalued.

Technical Outlook

KKB is now resting on its strong horizontal support of RM1.45. If this support is violated, the stock's next support would be the psychological RM1.00 mark but the strong support is the horizontal line at RM0.80.


Chart 2: KKB's daily chart as at Aug 8, 2012 (Source: Quickcharts)


Chart 3: KKB's monthly chart as at Aug 8, 2012 (Source: Tradesignum)

Conclusion

Based on poor financial performance & unattractive valuation, KKB is rated a SELL or AVOID. If it can hold at the critical support of RM1.45, it may turnaround if the financial performance recovers. However, a break below that critical support would be a bearish signal for the stock.




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