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Wednesday, February 26, 2014

LTKM- an attractive poutry stock

Results update

For QE31/12/2013, LTKM's net profit rose 11% q-o-q or 188% y-o-y to RM5.7 million on the back of higher revenue (which rose 11% q-o-q or 16% y-o-y to RM47 million). The increase in net profit was in tandem with the higher revenue resulting from higher sales and improved selling prices.


Table 1: LTKM's 8 quarterly result

LTKM's top-line has been on an uptrend for more than 5 years. Its PBT looks set to touch the RM10 million a quarter. The improvement on bottom-line in the past 2 years is attributable to higher revenue & improvement in profit margin. One reason for the improved margin is lower price of raw material, such as corn (see Chart 2 below). I believe LTKM will soon increase its dividend payout in line with higher profit.


Chart 1: LTKM's 28 quarterly results
 

Chart 2: Corn's monthly chart as at Jan 31, 2014 (Source: futures.tradingcharts.com)


Valuation

LTKM (closed at RM2.88 yesterday) is now trading at a PE of 5.5 times (based on last 4 quarters' EPS of 52 sen). At this multiple, LTKM is deemed attractive.

Technical Outlook

LTKM broke above its descending triangle in mid-2013 and rallied all the way to RM3.00. After this strong rally, the stock is likely to consolidate its gain before another big move.


Chart 3: LTKM's weekly chart as at Feb 25, 2014 (Source: Tradesignum)

Conclusion


Based on attractive valuation & goof financial performance, LTKM could be a good stock for long-term investment.

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, LTKM.

3 comments:

Alex Phun said...

Hi Alex, any ideas what's up with JCY? The stock price keeps falling daily ever since it released it quarterly results which showed turnaround profits!

Alex Lu said...

Hi Alex Phun

JCY has everything going for it. the result was great. The comment on the prospect was good. The technical outlook was slowly turning positive with the 50-day SMA & 100-day SMA lines poised to cut above the 200-day SMA line. The share prices are already above the 200-day SMA line.

Based on all these, I think JCY is a trading BUY and could well be a low risk long-term buy.

networking said...

Hi Alex,

Do you know what is percentage contribution for the last quarter EPS from revaluation of 2 properties ?

Thanks
Brian