Result Update
For QE31/3/2015, Tienwah's net profit rose 167% q-o-q to RM2.1 million while revenue was only marginally higher at RM87.5 million. Compared to the same quarter last year, net profit was 52% lower while revenue was 5% higher.
Tienwah's PBT dropped q-o-q from RM1.5 million to RM1.2 million. While the drop is small, it must be noted that PBT for QE31/12/2014 was significantly impacted by a series of one-off items, such as sales rebate of RM3.9 million, redundancy expenses of RM2.0 million and write -down of inventories to net realizable value of RM2.2 million. If these exceptional items were excluded, PBT for QE31/12/2014 would have been much higher at RM9.5 million. And, the q-o-q drop in PBT would have been RM8.5 million (instead of only RM0.3 million). Thus, Tienwah's financial performance has worsened contrary to my earlier expectation.
Table: Tienwah's last 8 quarterly results
Chart 1: Tienwah's last 32 quarterly results
Valuation
Tienwah (closed at RM1.86 yesterday) is trading at a PE of 16 times
(based
on my projected EPS 11.7 sen). If the one-off items booked in QE31/12/2014 were excluded, the last 4 quarters' EPS would be higher at 20.0 sen and the PE multiple would be lower at 9.3 times. Since Tienwah's earnings showed no improvement in QE31/3/2015, there is no point in worrying about under-estimating its earnings going forward... for now. At the PE multiple of 16 times, Tienwah is deemed fairly
valued.
Technical Outlook
As noted previously, Tienwah has been in a gradual downtrend since the beginning of 2014.
It seems to have found its support at RM1.85-1.87.
Chart 2: Tienwah's weekly chart as at May 14, 2015_10.30am (Source: Share Investors)
From the monthly chart, we can see that the stock is however in a long-term uptrend with support at RM1.70.
Chart 3: Tienwah's monthly chart as at May 14, 2015_10.30am (Source: Share Investors)
Conclusion
Despite the poor financial performance, Tienwah could be a good
stock for long-term investment based on its mildly positive technical outlook.
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, Tienwah.
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