This is a personal weblog, reflecting my personal views and not the views of anyone or any organization, which I may be affiliated to. All information provided here, including recommendations (if any), should be treated for informational purposes only. The author should not be held liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.
Tuesday, March 05, 2013
CCM- a nascent recovery play?
Results Update
For QE31/12/2012, CCM's net profit increased by 120% q-o-q or 91% y-o-y to RM18 million while revenue was mixed - rose 1% q-o-q but dropped 6% y-o-y - to RM378 million. Revenue dropped q-o-q due to lower revenue contribution from the Chemicals and Fertilizers Divisions. Bottom-line improved due to due to improvement in gross profit margins across the Divisions; operational cost reduction in Chemicals and Fertilizers Divisions; and recognition of change in fair value of investment properties of RM7.4 million.
The management continues to remain cautious and expect the challenging operating environment ahead.
Table: CCM's last 8 quarterly results
Chart 1: CCM's last 28 quarterly results
Valuation
CCM (closed at RM1.02 today) is now trading at a PE of 11.5 times (based on last 4 quarters' EPS of 8.9 sen). At this PE multiple, CCM is deemed fairly valued.
Technical Outlook
CCM's long years in the wilderness was noted in my previous post entitled CCM- a 6-year decline!. From the chart below, we can see that irregular downward channel (Rx-Rx, Sx-Sx) which guided the share price lower. In its deeply oversold position, the stock could stage a rebound that could recoup some of its lost ground. It is too hopeful to expect the share price to rise up to Rx-Rx but a recovery to R1-R1 is not too far-fetch.
Chart 2: CCM's weekly chart as at Mar 4, 2013 (Source: Tradesignum)
Conclusion
Based on challenging operating environment & unexciting financial performance, the only argument to but CCM is that it is deeply oversold.
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, CCM.
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