Results Update
For QE30/11/2012, Zhulian's
net profit increased by 11% q-o-q or 9% q-o-q to RM31 million while
revenue increased by 6% qo-q or 35% y-o-y to RM117 million. The increase
in revenue on q-o-q basis was attributable to higher demand from the
local & Thailand markets. This, plus better share of profit of
equity accounted investee, led to increased bottom-line.
Table: Zhulian's last 8 quarterly results
Chart 1: Zhulian's last 25 quarterly results
Valuation
Zhulian (at RM2.92 now) is trading
at a PE of 11.7 times (based on last 4 quarters' EPS of 25 sen). As a
fast-growing mid-size consumer stock, this PE multiple, Zhulian may
command a PE of 12-14 times. As such, the stock is nearly fully valued.
Technical Outlook
Zhulian
is in a strong uptrend but it is now pressing against the psychological
resistance of RM3.00. Until it has broken above this resistance,
Zhulian is expected to trade sideway with the 20-week EMA line acting as
a support (currently at RM2.68).
Chart 2: Zhulian's weekly chart as at Jan 25, 2012_9.30am (Source: quickcharts)
Conclusion
Based
on good financial performance, Zhulian is a good stock for long-term
investment. It is however trading very near its fair value and its
upside is currently capped by the psychological resistance at RM3.00. I
would rate the stock a HOLD.
Note:
In
addition to the disclaimer in the preamble to my blog, I hereby confirm
that I do not have any relevant interest in, or any interest in
the acquisition or disposal of, Zhulian.
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