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.
Thursday, July 18, 2013
Huayang- short-term setback?
Results Update
For QE30/6/2013, Huayang's net profit dropped by 28% q-o-q or 25% y-o-y to RM12 million while revenue also declined by 21% q-o-q or 18% y-o-y to RM80 million. The poorer performance was due to slower construction progress and minimal launches recognition from preceeding quarter and current quarter.
Table: Huayang's last 8 quarterly results
Chart 1: Huayang's last 29 quarterly results
Valuation
Huayang (at RM3.17 yesterday) is trading at a PE of 8.8 times (based on last 4 quarters' EPS of 36 sen). At this PE, Huayang is still deemed attractive but its upside is limited. It may trade up to a PE of 10 times; thus giving an upside of 14% (to RM3.60).
Proposed Bonus Issue
Huayang has just proposed a 1-for-3 bonus issue. The last time, it proposed a bonus issue (also a 1-for-3 bonus), was in middle of 2011 (completed in October).
Technical Outlook
Huayang's uptrend accelerated after it broke above the horizontal line at RM1.70. See Chart 2. Thestock rallied to a high of RM3.33-3.34. Profit-taking set in and the stock traded in a short-term downward channel (ABCD). See Chart 3. Huayang's uptrend will continue if it can break above the recent high at RM3.33-3.34.
Chart 2: Huayang's weekly chart as at July 17, 2013(Source: quickcharts)
Chart 3: Huayang's daily chart as at July 17, 2013(Source: quickcharts)
Conclusion
Based on good financial performance & still attractive valuation, Huayang is a good stock for long-term investment. However, I expect short-term profit-taking activities to cap its upside at RM3.33-3.34 notwithstanding an attractive bonus issue to come.
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, Huayang.
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