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Monday, December 07, 2015

POS: Share price dragged down by lower earnings

Results Update

For QE30/9/2015, POS's net profit plummeted by 85% q-o-q or 90% y-o-y to RM3.5 million while revenue increased by 2% q-o-q or 7% y-o-y to RM399 million.


Table: POS's last 8 quarterly results

From Chart 1, we can see that the lower profit for QE30/9/2015 was due to lower profits for all segments (especially, the Mail segment) and continued losses for the Retail segment.


Chart 1: POS's last 4 quarters' segmental revenue & profits


Chart 2: POS's last 40 quarterly results

Valuation

POS (closed at RM3.29 as at 3.45pm today) is now trading at PE of 13.9 times (based on last 4 quarters' EPS of 23.7 sen). At this PER, POS is deemed fairly valued, provided its earnings recover from in the following quarters.

Technical Outlook

POS may soon test its long-term uptrend line, with support at RM3.30-3.20. Those who had sold off in May based on my earlier recommendation, can look to buyback into the stock. See earlier post (here).


Chart 3: POS's monthly chart as at Dec 7, 2015_3.00pm (Source: ShareInvestor.com)

Conclusion

Despite poorer financial performance, I would rate POS a BUY ON WEAKNESS as it approaches the long-term uptrend line support at RM3.00-3.20.

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, POS.

4 comments:

networking said...

Hi Alex,

What do you think about Kobay and AWC ?

Cheers
Brian

networking said...

Hi Alex,

What do you think about Kobay and AWC ?

Cheers
Brian

Alex Lu said...

Hi networking

The price movement for Kobay & AWC is consistent with their financial performance in the past 2 years. That's to say that Kobay is doing well and AWC is not.

Kobay's better quarterly earning in the past 3 quarters mirrors that of late 2013 & early 2014. However its earnings are rather erratic. So I won't be surprised if Kobay's bottom-line were to drop back again next year.

Overall, you have to be cautious investing or trading in this type of shares. Remember that share price movement must be justified by better earning and if everything goes South, it is always good to be holding a stock with good financial position. Thus, you need to also check its Balance Sheet and look out for little things like current ratio, debt-to-equity ratio, cash holding, receivable & inventory turnover, etc.

I hope that answer your questions.

networking said...

Hi Alex,

Thanks for your reply. I will take note of those "little things" you mentioned into consideration

Cheers
Brian