Petdag: Barely Profitable

Result Update

For QE31/12/2014, Petdag's net profit dropped by 99.7% q-o-q & y-o-y to RM445k while revenue also dropped 9% q-o-q or 11% y-o-y to RM7.45 billion. 

Revenue dropped q-o-q due to 9%-drop sales volume and 1%-drop in selling prices. Group operating profit decreased by RM214.5 million to RM16.2 million due to lower gross profit (dropped by RM153.5 million) & higher operating expenditure (increased by RM55.8 million). Gross profit margin dropped due to margin compression brought on by sharp decline in selling price in line with the fall of MOPS prices.Operating expenditure increased due to higher planned repair & maintenance activities at petrol stations and terminals and higher IT expenses.

Table: Petdag's last 8 quarterly results

Petdag's margin has been sliding since 2009. While the margin may rebound back in the current quarter, the margin will remain weak. Bottom-line will remain depressed.

 
Chart 1: Petdag's last 27 quarterly results

Valuation

Petdag (closed at RM17.00 yesterday) is now trading at a trailing PE of 34 times (based on last 4 quarters' EPS of 50 sen). Based on PE multiple, Petdag is overvalued.

Technical Outlook

Petdag broke its long-term uptrend line at RM18.50 in November 2014. It managed to stage a rebound from the horizontal support of RM15.00-16.00.


Chart 2: Petdag's monthly chart as at Feb 12, 2015 (Source: ShareInvestor.com)

Conclusion

Based on poor financial performance, high valuation & bearish technical outlook, Petdag is rated a SELL.

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, Petdag.