JTinter- profit slid further

Result Update

For QE31/12/2012, JTInter's net profit dropped by 90% q-o-q or 89% y-o-y to RM3 million while revenue was mixed, dropped 9% q-o-q but rose 5% y-o-y to RM290 million. The dropped in net profit q-o-q was attributable to lower sales volume, higher marketing investment* & a one-time restructuring impact of the Group leaf and stemmery operations amounting to RM12.2 million which included an impairment of plant and machinery (RM3.3 million), employee redundancy payments (RM4.2million), and a goodwill exit payments to growers (RM3.1million). [*Note: We can't tell how much was  the additional marketing investment but we can see that Other Operating Expenses increased by 20% y-o-y from RM168 million to RM201 million as compared to the 9% y-o-y increase in revenue from RM266 million to RM290 million.]

Table: JTInter's last 8 quarterly results


Chart 1: JTInter's last 23 quarterly results

Valuation

JTInter (closed at RM6.54 yesterday) is now trading at a PE of 17 times (based on last 4 quarters' EPS of 38.73 sen). At this PE, JTInter is fully valued.

Technical Outlook

JTImter is still in an uptrend line with support at RM6.20.


Chart 2: JTInter's weekly chart asat Mar 7, 2013 (Source: Quickcharts)

Conclusion

Based on poorer financial performance & unattractive valuation, I think it is advisable to take some profit on JTInter. However, since the stock is still in an uptrend line, we can afford to do so by selling into strength.

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, JTInter.