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Tuesday, March 04, 2014

PIE: Eat it while it's hot


Result Update

For QE31/12/2013, PIE's net profit rose by 19% q-o-q but dropped by 9% y-o-y to RM12.5 million while revenue rose by 23% q-o-q or 54% y-o-y to RM143 million.

The increased in revenue was mainly due to more demand on electronic manufacturing products from new and existing customers. However, it was partially offset by lower demand on other products, i.e raw wire, cables, wire harness and trading goods.

Last 4 quarters' profit before tax was increased by RM5.016 million or 11% if compared with preceding 4 quarters. This result was due to higher revenue achieved and higher gain from foreign currency exchange. However, the profit was limited by lower margin of products mix, lower reversal of slow moving inventory and doubtful debts provision, lower investment income and higher operating expenses


Table: PIE's last 8 quarterly results


Chart 1: PIE's last 23 quarterly results

Valuation

PIE (closed at RM8.11 yesterday) is now trading at a PE of 13.7 times (based on last 4 quarters' EPS of 59 sen). At this  multiple, PIE is deemed fairly valued.

Technical Outlook

PIE rallied after it broke above the line connecting the recent peak at RM5.30. A sharp rally like what we had seen can succumb to equally sharp profit-taking.


Chart 2: PIE's weekly chart as at Mar 3, 2014 (Source: Tradesignum)

Conclusion

Despite the improved financial performance & reasonable valuation, PIE may warrant a bit of profit-taking after its recent scorching rally.

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, PIE.

6 comments:

MaxWealth88 said...

hi alex, can you pls comment on DSonic?

thanks
maxwealth88

gwynwelsh said...

Dear Alex,

What do you think of MPHB Capital?

Alex Lu said...

Hi MaxWealth88

DSonic has shown a slight dip in its bottom-line in the last quarter. It may not be significant. If the next quarter shows further deterioration, you must be careful.

I am cautious of DSonic. I do not like the management's overly aggressive bonus issue & share split since its listing. To me, this is like price grouching. While it is important to give a good return to the shareholders in the form of dividend & capital appreciation, a company that is too preoccupied with the share price is not a good sign.

At this time, I would recommend taking some profit on this stock.

Alex Lu said...

Hi gwynwelsh

MPHB Capital has a breakout at RM1.77-1.78. That breakout is still intact.

gwynwelsh said...

Dear Alex,

Thank you for your reply.

Do you think MPHB Capital is good for long term investment, say for 3 years? Was told that they need Bank Negara approval before they could announce dividend.

Alex Lu said...

Hi gwynwelsh

I think MPHB Capital is good for long-term investment. It has a few plots of land that can be developed or sold at good prices. SC asked for these properties to be revalued just before approving the demerger exercise, which suggest to me that SC wants the shareholders to take up the offer for sale. Otherwise, the majority shareholder & insiders would have grabbed the shares at cheap prices.