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Tuesday, July 01, 2014

Magni: Bottom-line dropped q-o-q due to lower sales!

Results Update
For QE30/4/2014, Magni's net profit dropped 43% q-o-q but rose 17% y-o-y to RM8.5 million while revenue dropped 13% q-o-q but rose 19% y-o-y to RM162 million. The q-o-q decline in revenue was attributable to lower sales orders received from garment business. This has caused a drop in the bottom-line for the company.


Table: Magni's last 8 quarterly results


Chart 1: Magni's last 21 quarterly results

Valuation

Magni (trading at RM3.16 as at 3.45pm) has a trailing PE of 8.2 times (based on last 4 quarters' EPS of 38.7 sen). At this PE, Magni's valuation is still undemanding. It may command a PE of 9-10 times.

Technical Outlook

Magni is in a gradual uptrend line. Its immediate support is at the 40-week EMA line at RM2.50. That would be a good entry level for the stock.


Chart 2: Magni's weekly chart as at Jun 27, 2014 (Source: Tradesignum)

Conclusion

Despite the weaker financial performance, Magni is still a good stock for long-term investment in view of its attractive valuation & good 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, Magni.

2 comments:

Big Sea said...

Historically Q3 is always the strongest quarter for MAGNI, so perhaps not too fair to say that sales is weak.

Over the past 4 years, Q4 revenue is always about 83% - 88% of Q3 revenue. Therefore latest Q4 revenue is actually within expectation.

Alex Lu said...

Hi Big Sea,

I agree. It is shown clearly in the chart for past quarterly results.

That's why I still rate it a HOLD. I was happily surprised that I've called a BUY on this stock sometimes back.