Monday, May 27, 2013

PIE- decline in both top-line & bottom-line

Result Update

For QE31/3/2013, PIE's net profit dropped 49% q-o-q or 6% y-o-y to RM5.5 million while revenue was mixed- dropped 12% q-o-q but rose 2% y-o-y to RM82 million. Top-line dropped q-o-q due to lower demand for electronics manufacturing products. Net profit has similarly dropped due to lower profit margin on product mix, lower forex gain & higher provision of slow moving inventories.

Table: PIE's last 8 quarterly results

Chart 1: PIE's last 20 quarterly results


PIE (closed at RM4.55 at lunch time) is now trading at a PE of 9.3 times (based on last 4 quarters' EPS of 49 sen). At this  multiple, PIE is deemed fairly valued. Upside is limited due to poorer financial performance.

Technical Outlook

PIE has broken above its horizontal line at RM4.65 as investors chased after a dividend payout of 32 sen. This is the first day of trading after the entitlement date and the chart below has not been adjusted for this entitlement. The adjusted immediate horizontal support would be at RM4.33, instead of RM4.65. The stock is now trading at RM4.55.

Chart 2: PIE's weekly chart as at Mar 27, 2013_3.00pm (Source: Quickcharts)


Due to poorer financial performance, PIE is now rated as a HOLD in view of its mildly positive long-term technical outlook and fairly reasonable valuation. However, I believe the stock will face some selling pressure in the short-term due to the deteriorating financial performance.

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, PIE.

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