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Thursday, September 04, 2014

Tongher: Poised to move higher

Result Update

For QE30/6/2014, Tongher's net profit increased by 15% q-o-q or 62% y-o-y to RM9.7 million while revenue was mixed- dropped 1% q-o-q but 6% y-o-y to RM132 million. For 1HFY14, Tongher's revenue increased due to the increase in sales demand from both fasteners and aluminium division. Higher sales demand has led to higher profit before tax, in conjunction with the improvement from the profit margin attained in current quarter-to-date.


Table 1: Tongher's last 8 quarterly results


Chart 1: Tongher's last 39 quarterly results 

Valuation

Tongher (closed at RM2.19 yesterday) is trading at a PE of 12 (based on last 4 quarters' EPS of 18.85 sen). At this PE, Tongher is deemed fairly valued.

Technical Outlook

Tongher has broken above the horizontal resistance at RM2.20 (See Chart 2). More importantly, Tongher has broken above its long-term downtrend line at RM2.10 (see Chart 3). With this breakout, the stock is poised to begin its next upleg. Its next resistance will be at RM2.50 & thereafter at RM2.85.

 
 Chart 2: Tongher's weekly chart as at Aug 29, 2014 (Source: Tradesignum)


Chart 3: Tongher's monthly chart as at Aug 29, 2014 (Source: Chartnexus)

Conclusion

Based on improved financial performance & bullish technical outlook, Tongher is rated a BUY.

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, Tongher.

3 comments:

lai said...

Hi Alex,

What do you think of MMSV and Seacera?

Financial wise, i think they did prety OK.

Thanks.

Alex Lu said...

Hi lai

I don't know these 2 stocks, MMSV and Seacera. I will give you the technical take only.

Seacera is still in an uptrend. The 50-d SMA line at RM1.15 could be a good support. A rebound from this level could send the stock back to recent high of RM1.40. Watch out for bearish divergence. If you are trading; buy at RM1.15 & sell near to RM1.40.

MMSV is hugging onto its steep 20-d SMA line at RM0.40. If it breaks below this line, it could slide to RM0.35 & then RM0.30. Both levels are horizontal supports & the next 50-d and 100-d SMA line supports.

lai said...

Thanks Alex. Always a pleasure reading your reply.

Keep up your excellent work!