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Monday, November 02, 2015

Luxchem: Earnings rose on forex gain

Results Update

For QE30/9/2015, Luxchem's net profit increased by 33% q-o-q or 118% y-o-y to RM13.0 million while revenue rose 5% q-o-q or 6% y-o-y to RM169 million. Improved bottom-line was due to higher profit before tax from the trading and manufacturing segment and higher realized forex gain due to the strengthening of USD.


Table: Luxchem's last 11 quarterly results (Source: ShareInvestor.com)
 
 
Chart 1: Luxchem's last 11 quarterly results (Source: ShareInvestor.com)

Valuation

Luxchem (closed at RM1.58 last Friday) is now trading at a PER of 13.4 times (based on last 4 quarters' EPS of 11.76 sen).  At this PER, Luxchem is deemed fairly attractive.

Technical Outlook

Luxchem is in an upward channel, with support at RM1.20 & resistance at RM1.70. It tested the upper line at RM1.65 last few weeks and poised to drift back down.


Chart 2: Luxchem's weekly chart as at Oct30, 2015 (Source: ShareInvestor)

Conclusion

Luxchem could be a good stock for a long-term investment in view of its good financial performance. However, the good result could be rolled back if MYR strengthens in the near future. This plus the high valuation and overhead resistance should prompt some investors to take profit on this stock. I think that would be a good idea.

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, Luxchem.

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