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Monday, August 18, 2014

PIE: Bottom-line & top-line dragged down by lower electronic demand

Result Update

For QE30/6/2014, PIE's net profit dropped 13% q-o-q or 17% y-o-y to RM7.9 million while revenue was mixed- dropped 27% q-o-q but rose 6% y-o-y to RM115 million. Revenue declined q-o-q mainly due to lower demand for electronics manufacturing products but partly offset with higher demand for raw wire and cable and wire harness products. Pretax profit reduced by 15% q-o-q mainly due to lower revenue achieved, lower gain from foreign currency exchange and higher provision of doubtful debts. However, the reduction was limited by higher margin of product mix and lower operating expenses.


Table: PIE's last 8 quarterly results


Chart 1: PIE's last 27 quarterly results

Valuation

PIE (closed at RM6.92 last Friday) is now trading at a PE of 13.3 times (based on last 4 quarters' EPS of 52 sen). At this  multiple, PIE is deemed fairly valued.

Technical Outlook

PIE rallied to a high of RM7.23 after it broke above the 2007 high of RM5.00. The indicators show weakness and possible correction ahead.


Chart 2: PIE's weekly chart as at Aug 15, 2014 (Source: Chartnexus)

Conclusion

Despite the poorer financial performance & technical weaknesses, we should continue to reduce our position in PIE.
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.

2 comments:

lai said...

Hi Alex,

Dp you have a good opinion on TRC?

Thanks.

Alex Lu said...

Hi lai

TRC is at its horizontal support of RM0.50. We should be cautious when a stock behaves weakly in a 'good' market, such as this.

If you know the reason behind the weakness and the company can overcome that 'problem', then you can take advantage of the weak prices. Otherwise, it is best to give it a miss.