Petdag: Bottom-line recovered

Result Update

For QE31/3/2015, Petdag's net profit soared to RM206 million despite a sharp plunge in revenue to RM6.1 billion.

 

Revenue dropped y-o-y due to a 22%-drop in average selling price coupled with a 6%-drop in sales volume. Group operating profit increased y-o-y by RM58.3 million as a result of lower operating expenditure (dropped by RM64.8 million) and higher other  income (rose by RM19.9 million) which had more than offset by lower gross profit dropped by RM26.4 million).

Group operating profit increased q-o-q mainly due to higher gross profit (rose by RM156.8 million) coupled with lower operating expenditure (declined by RM100.1 million). Gross profit dropped in QE31/12/2014 mainly as a result of margin compression in line with the sharp decline in MOPS prices. In addition, operating expenditure, manpower expenses and marketing and promotions expenses were lower in the current quarter compared to the preceding quarter (QE31/12/2014). Higher operating expenditure in QE31/12/2014 was due to higher repair and maintenance activities at petrol stations and terminals.

Table: Petdag's last 8 quarterly results

 
Chart 1: Petdag's last 28 quarterly results

Valuation

Petdag (closed at RM21.64 yesterday) is now trading at a trailing PE of 39 times (based on last 4 quarters' EPS of 55.54 sen). Based on PE multiple, Petdag is overvalued.

Technical Outlook

Petdag tested its long-term uptrend line with support at RM16.00 in November 2014. From there, it staged a good rebound which sent the share price to a recent high of nearly RM23.00. I doubt Petdag is ready to charge through the horizontal resistance at RM23-24. (Note: I have revised the long-term uptrend line as drawn in my previous post.)


Chart 2: Petdag's monthly chart as at May 11, 2015 (Source: ShareInvestor.com)

Conclusion

Despite the improved financial performance & positive technical outlook, I still maintain my rating for Petdag as SELL or REDUCE due to demanding valuation. However, if the share prices were to ease back to the uptrend line (say, RM18), I think Petdag could be 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, Petdag.