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Thursday, November 19, 2015

Kianjoo: Earning continued to rise

Result Update

For QE30/9/2015, Kianjoo's net profit increased by 25% q-o-q or 17% y-o-y to RM44 million while revenue increased by 3% q-o-q or 22% y-o-y to RM404 million. PBT increased q-o-q due to higher PBT from the cans division (from RM36.4 million to RM45.9 million) which more than offset the drop in PBT from the cartons division (from RM4.7 million to RM3.7 million resulting from a loss on USD loan). Revenue increased due mainly to higher revenue from the cartons division as a result of increased demand from Vietnamese customers preparing for the festive season.


Table 1: Kianjoo's last 8 quarterly results

Kianjoo's quarterly PBT managed to finally break above the RM50 million mark for the first time. This could herald a new exciting era for the company. Unfortunately, it is likely to be taken private by Aspire Insight Sdn Bhd at RM3.30 shortly. See below.


Chart 1: Kianjoo's last 36 quarterly results
 
Valuation

Kianjoo (closed at RM3.36 yesterday) is now trading at a PE of 10.4 times (based on last 4 quarters' EPS of 32.3 sen). At this multiple, Kianjoo is deemed attractively valued.

Outstanding Privatization Proposal

In 2013, Aspire Insight- a 60:40 JV between Kianjoo's former COO, Chee Kay Leong & EPF) made an offer to privatize Kianjoo at a price of RM3.30  per share. This offer faced legal challenges from substantial shareholders, such as Anthony See, which had since been resolved.

The offer made by Aspire Insight was based on FY2013 PER of 12.4 times & 1.4 times NTA. With potential renewed interest from a Japanese party and better financial results over the past 2 years, Aspire Insight might have to revise its offer price to induce more acceptance. The market seems to believe that this is likely as reflected by the share price trading at above the offer price of RM3.30 If the offeror were to revise the price, the new price is likely to be RM3.80-4.00.

Technical Outlook

Kianjoo is in an "uptrend" line with support at RM3.00. Resistance will be at RM3.60.


Chart 2: Kianjoo's monthly chart as at Aug 28, 2015 (Source: ShareInvestor.com)
 
Conclusion

Based on good financial performance, attractive valuation & positive technical outlook, Kianjoo is a good stock to consider for long-term investment. The only drawback is the outstanding privatization offer at RM3.30 which will force an exit on shareholder at below the current trading price.

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, Kianjoo.

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