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Thursday, January 23, 2014

Huayang- demand for affordable homes is still strong!


Results Update

For QE31/12/2013, Huayang's net profit increased 60% q-o-q but dropped marginally by 1% y-o-y to RM19.7 million while revenue increased by 28% q-o-q & 24% y-o-y to RM130 million. Net profit dropped marginally y-o-y due to higher sales & marketing expenses- as a result of more launches. Revenue increased due to more launches. The rebound in revenue shows that Huayang is not affected by recent slowdown in sales as its products are aimed at the mass market where demand is still strong. Despite the speculative curbs imposed by government, genuine buyers will not be deterred.


Table: Huayang's last 8 quarterly results


Chart 1: Huayang's last 22 quarterly results 

Valuation

Huayang (at RM1.99 yesterday) is trading at a PE of 8.6 times (based on last 4 quarters' EPS of 23.3 sen). At this PE, Huayang is still deemed fairly valued.

Technical Outlook

Huayang is still in an uptrend. If we used the 50-week EMA line as the uptrend line, then the support is at RM1.92.


Chart 2: Huayang's weekly chart as at Jan 22, 2014 (Source: Tradesignum)
 
Conclusion

Based on recovery in financial performance, attractive valuation & positive technical outlook, the rating for this stock is revised from SELL INTO STRENGTH to 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, Huayang.

4 comments:

Kin Khuen said...

Hi Alex.

Nowaday everyone is looking for affordable house, no doubt it's a good company with high demand.

Btw, why does the "SHELL" stock prices has dropped so much? Is it worth to buy it for long term?

Alex Lu said...

Hi Kin Khuen

Shell has dropped a lot since it broke the horizontal support at RM10.50 in July-August 2011. I feel it is relatively safe to buy into the stock (but slowly).

Lisa Wong said...

Hi Alex,
what;s your opinion of 3A? is it worth for BUY now?

Alex Lu said...

Hi Lisa Wong

3A rallied above its long-term downtrend line at RM1.05. Since then, it had dropped back below RM1.00. Thus, the recent rally was a bull-trap. The downtrend line is still intact and the stock's technical outlook remains bearish.