For QE31/10/2013, Cypark's net profit dropped 26% q-o-q but rose 44% y-o-y to RM7.3 million while revenue dropped marginally by 1% q-o-q & 5% y-o-y to RM53 million. Bottom-line dropped q-o-q due to the lower revenue generated from the renewable energy related projects. The profit before tax of the Group also decreased by 19.1% q-o-q, from RM11.8 million to RM9.5 million in current quarter due to higher finance costs incurred for environmental engineering and renewable energy projects.
Table: Cypark's last 8 quarterly results
Chart 1: Cypark's last 14 quarterly results
Financial Position
As at 31/102013, Cypark's financial position is mixed, with current ratio at comfortable 1.2 times while gearing ratio at an elevated level of 1.5 times. Even the current ratio is not free of concern as the bulk of its current assets is in the form of receivables of RM199 million which translates to a debtors' collection period of 335 days. One positive point to note is its cash reserve of RM113 million. If this cash is net off from the bank borrowings, Cypark's gearing ratio would drop to a more reasonable level of 0.96 time.
Valuation
Cypark (closed at RM2.43 at end of morning session) is now trading at a PE of 11 times (based on last 4 quarters' EPS of 21 sen). At this multiple, Cypark is deemed reasonably valued.
Technical Outlook
Cypark rallied in the past 2-3 months to hit its horizontal line at RM2.60. Today, it dropped 12 sen to settle at RM2.43 at end of morning session. This is near a horizontal line of RM2.40 but the really strong support would be at RM2.20. We will have to wait & see whether the stock can hold at the RM2.40 mark.
Chart 2: Cypark's weekly chart as at Dec 31, 2013 (Source: Tradesignum)
Conclusion
Despite the good financial performance & reasonable valuation, Cypark is still rated a HOLD. If the share price were to drop to RM2.20, I think Cypark could be a trading BUY.
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, Cypark.
Hi Alex,
ReplyDeleteI like your blog and i learn a lot from here. I want to continue learning from here.
PE for Cypark at RM2.43
= 2.43/21
= 11x
From your sentence below:
"At this multiple, Cypark is deemed reasonably valued."
1. How do you know the PE is multipled? How much do it multipled? Can you show me, Sifu Alex?
2. What is range for PE that this company is deemed reasonably value?
Sorry for asking so much.
From,
David Chan
Hi Dav C,
ReplyDeleteWhat's a reasonable PE multiple depends on the industry, the current industry outlook, the company's market cap, the management & shareholders, etc.
Cypark is a medium-size company, with decent management & shareholders, that is involved in the green energy sector that is currently receiving good government support & good press report. On balance, I feel that it could command a PE of 13-15 times.
It is a subject assessment and my view may differ from another investor or player.
Finally, on the computation of PE and other valuation matrix (Price to Sales, Price to Book Value, etc), I would recommend that you go to Investopedia. That website has a good write-up on fundamental analysis.
Good luck.
Thanks for guidance. I did read the investopedia. Hope you can continue guide me.
ReplyDeleteHi Alex,
ReplyDeleteI google for CYPARK info and accidentally found your blog. Wow this is nice, like some guidance for me. I'm new in doing shares investment, don't know how to determine the support line located. ~.~''
I like this company concept, enter at higher price 2.5x, I feel lost now because CYPARK recently 2.1x, should I buy at 2.1x to pull down my average price? or do nothing wait for it increase above 2.5x?
I hope I can get some personal opinion from you. Thanks~
Happy trading and Happy CNY~
Regards,
Chloe Lew
Hi Chloe Lew
ReplyDeleteWelcome to nexttrade. CYPARK is in its next upleg. An uptrend line can be drawn from its Feb 2013 and it is still intact. The support is at RM2.15, which happens to be the 40-week EMA line.
On technical ground, Cypark can be a buy since it tested the uptrend line support rebounded.