NCB- losing out to Westports

Result Update

For QE30/9/2013, NCB returned to profitability with a quarterly net profit of RM27.3 million. This compared favorably to a net loss of RM5.7 million in QE30/6/2013 but it is still much lower than a net profit of RM45.2 million in the same quarter last year. The q-o-q improvement was attributed to lower operating expenditure while the y-o-y decline was due to losses incurred by its logistics operations, Kontena Nasional which incurred cumulative losses of RM50.6 million for the 9-month ended 30/9/2013. In addition, the port operations seems to be sliding, with containers handled for the 9-month ended dropping from 2.355 million TEUs to 2.177 million TEUs. For comparison purpose, NCB's port operations handled 1.461 million TEUs for 6-month ended 30/6/2013 (a decline from 1.568 millon TEUs handled in 6-month ended 30/6/2012) while Westports' port operations handled 3.6 million TEUs for the same period this year.


Table: NCB's last 8 quarterly results


Chart 1: NCBs last 22 quarterly results


Valuation

NCB (at RM3.70 yesterday) is now trading at a PE of 22 times (based on last 4 quarters' EPS of 17 sen). At this PE, NCB is deemed overvalued.

Technical Outlook

NCB broke its accelerated uptrend line, S1-S1 at RM4.10 in late August. Its immediate support is the long-term uptrend line, SS at RM3.40.


Chart 3: NCB's daily chart as at Oct 28, 2013 (Source: quickcharts)

Conclusion

Based on poor financial performance, overvaluation & deteriorating technical outlook, NCB is rated a SELL.

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, NCB.