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Wednesday, February 26, 2014

Tienwah- bottom-line plummeted

Result Update

For QE31/12/2013, net profit dropped 78% q-o-q or 74% y-o-y to RM1.5 million on the back of lower revenue of RM89 million  (down 7% q-o-q or 5% y-o-y). The company attributed the drop in revenue due to lower demand. Profit before tax was at RM3.0 million as compared to RM12.3 million for the preceding quarter, a decreased of RM9.3 million or 76%, impacted by lower revenue and provision of redundancy expenses of RM2.8 million for staff in a subsidiary.


Table: Tienwah's last 8 quarterly results


Chart 1: Tienwah's last 28 quarterly results

Valuation

Tienwah (closed at RM2.58 yesterday) is trading at a PE of 10.2 times (based on last 4 quarters' EPS of 25.4 sen). At this PE, Tienwah is deemed fairly valued.

Technical Outlook

Tienwah's gradual uptrend, SS picked up in 2011. The 'accelerated' uptrend line, S1-S1 should provide support to the stock at RM2.40. Its immediate resistance is at RM2.60.


 Chart 2: Tienwah's weekly chart as at Feb 25, 2014 (Source: Tradesignum)

Conclusion

Despite the poor financial performance, Tienwah is still a good stock for long-term investment based on reasonable valuation & positive technical outlook.

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, Tienwah.


4 comments:

Critic of Tien Wah said...

What long term fundamentals does Tien Wah have?

Its exclusive contract with BAT is ending soon.

There Is no assurance that BAT will renew it.

Critic of Tien Wah said...

What long term fundamentals does Tien Wah have?

Its top and bottom lines have been severely impacted by declining printing volumes from BAT.

Its contract with BAT is ending soon in Dec 2015, and there is no assurance that BAT will renew the contract.

Expect Tien Wah share price to adjust downwards back to around $2 RM..

Alex Lu said...

Hi Critic of Tien Wah

TienWah's fundamentals are weak for reasons explained. Despite the medium-term uncertainty, this company is very well-managed. Its 10-year track record is solid in term of NP, positive operating cashflow & dividend. It is a good income stock with a DY of 5.5%.

Chartwise, it may drop back to its long-term uptrend line at RM2.00. At that level, it is a good long-term BUY.

Jeff said...

Hi Alex , is it Tienwah still worth to hold since looks the chat likely down trend , tq !