For QE31/12/2013, Petdag's net profit dropped by 33% q-o-q & 14% y-o-y to RM151 million while revenue was mixed; unchanged q-o-q but rose 9% y-o-y to RM8.385 billion. Revenue decreased by RM26.0 million compared to the preceding quarter as a result of decrease in sales volume by 4.0% despite higher average selling price by 3.9%. Group Profit Before Taxation was RM193.8 million, a decrease of RM121.9 million compared to the preceding quarter mainly due to higher operating expenditure by RM71.9 million and lower gross profit by RM54.5 million.
Table: Petdag's last 8 quarterly results
The chart below shows that Airport's top-line has been rising steadily since FY2009 while the bottom-line has been flattish. This is due to the decline in its profit margin.
Chart 1: Petdag's last 23 quarterly results
Petdag (closed at RM31.00 yesterday) is now trading at a trailing PE of 38 times (based on last 4 quarters' EPS of 81.7 sen). Based on PE multiple, Petdag is very expensive.
Petdag has been in a steady uptrend for the past 5 years. For the past 3 months, it has been range-bound between RM30 & RM31. With the 3 indicators (MACD, RSI & ADX) hooked down, the stock looks set for a pullback to its 40-week EMA line. This had happened before in late 2010, late 2011 & early 2013. The gravity-defying rise in this stock is nothing short of breath-taking!
Chart 2: Petdag's weekly chart as at Feb 6, 2014 (Source: Tradesignum)
Based on high valuation, poorer financial performance & some bearish technical signs, Petdag is rated SELL INTO STRENGTH.
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, Petdag.