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Thursday, August 07, 2014

MISC: Bottom-line heading south again?

Result Update

In QE31/3/2014, MISC's net profit dropped by 41% q-o-q or 4% y-o-y to RM288 million while revenue improved by 11% q-o-q & y-o-y to RM2.538 billion. Revenue increased q-o-q due to higher revenue in the Heavy Engineering following progress on projects in hand during the quarter. PBT dropped q-o-q due to an operating losses incurred in Petroleum business due to the decline in freight rates.


Table: MISC's last 8 quarterly results


Chart 1: MISC's last 33 quarterly results


Chart 2: BDI's weekly chart as at Aug 1, 2014 (Source: Investmenttools.com)

Valuation

MISC (closed at RM6.73 yesterday) is now trading at a PE of 13x its FY2013 EPS of 51 sen. Due to renewed weakness in shipping rates and the continued poor performance of its heavy engineering division (under MMHE), MISC's earnings would remain weak for the near term.

Technical Outlook

From the weekly chart, we can see that MISC is in an uptrend. A break below the RM6.30 level could signal a change in the trend, from uptrend to sideways (or even downtrend).


Chart 3: MISC's weekly chart as at Aug 6, 2014 (Source: Tradesignum)

Conclusion

Based on poorer financial performance and challenging operating environment- albeit a still positive technical outlook - MISC is now rated a HOLD. That rating would change to REDUCE if the share price were to breach the RM6.30 mark.

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, MISC.

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