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Tuesday, August 12, 2014

RCECap: Recovery in bottom-line halted!

Result Update

For QE30/6/2014, RCECap's net profit dropped 54% q-o-q to RM6.9 million while revenue inched up 1.5% to RM30.4 million. RCECap managed to turnaround from a net loss of RM27.8 million. Net profit dropped q-o-q due to higher loan impairment of RM6.8 million and loss on early redemption of ABS bonds of RM2.6 million that will lead to savings on future coupon payments.


Table: RCECap's last 8 quarterly results


Chart 1: RCECap's last 29 quarterly results

Valuation

RCECap (closed at RM0.345 yesterday) is now trading at a PE of 10.8 times, a Price to Book of 0.6 time and has a dividend yield of 4.3%. At these multiples & DY, RCECap is deemed fairly valued.

Technical Outlook

RCECap broke above its downtrend line, RR at RM0.28 in early part of the year. A short-term uptrend has begun. Its immediate support is the horizontal line at RM0.35 while its immediate resistance is the horizontal line at RM0.40.


Chart 2: RCECap's weekly chart as at Aug 11, 2013 (Source: Tradesignum)

Conclusion

Despite the poorer financial performance last quarter, RCECap is rated a HOLD based on mildly bullish technical outlook. Its valuation indicates limited upside unless its earnings improve significantly.

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, RCECap.

7 comments:

lai said...

Hi Alex,

Looks like Ho Hup is back again.

May i have your view?

Thanks!

Alex Lu said...

Hi lai,

Hohup did a neat trick in April when it made a new high in the current rally before selling down.

I fear that it might do the same again. The sudden run-up has all the hallmark of another neat trick.

"Trick me once, shame on you. Trick me twice, shame on me."

hs liu said...

hi alex, how about mitra this share? thank you.

lai said...

Hi Alex,

based on technical consideration, what is your target price for IWcity (Tebrau)?

Thank you.

Alex Lu said...

Hi lai

Ho Hup is a tricky. Is the rally of Aug 8 & 11 a breakout of an intermediate downtrend? If so, it may retest the recent high of RM1.70.

Is it a corrective phase within an intermediate downtrend? If so, we should sell into this rebound.

The entire property sector is in state of confusion. It has weakened considerably and yet we are still seeing massive land acquisition by the property players. What's really going on the market?

Alex Lu said...

Hi hs liu

Mitra broke above its horizontal resistance at RM0.93. This signal the continuation of its prior uptrend. It has reached the first target of RM1.02-1.05. Next target could be RM1.30.

Alex Lu said...

Hi lai

IWcity's immediate resistance is at RM1.80. If it can cross that level, it may go to RM2.40.

Kenanga valued it at RM3.39 (cum-rights).