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Monday, February 29, 2016

Chinwel: Earnings maintained

Results Update

In Qe31/12/2015, Chinwel's net profit rose 3% q-o-q or 124% y-o-y to RM19 million while revenue dropped 13% q-o-q or 2% y-o-y to RM123 million. Revenue dropped due to a drop in revenue in the fastener division of RM19 million which was partially offset by a rise in revenue in wire products division of RM1 million. PBT was unchanged as the drop in PBT in the fastener division of RM2 million was fully offset by RM1 million gain each recorded by the wire products division & the investment holdings division.


Table: Chinwel's last 11 quarters' P&L


Chart 1: Chinwel's last 11 quarters' P&L
 
Valuation

Chinwel (closed at RM1.81 last Friday) is now trading at a PE of 9X (based on last 4 quarters' EPS of 20.13 sen). Based on this PER, Chinwel is deemed fairly valued.

Technical Outlook

Chinwel broke above its strong horizontal resistance at RM1.73 in early November 2015. As noted earlier, the stock has broken above its 15-year triangle formation at the same time. Let's wait & see whether this bullish breakout may lead to a sustained rally.


Chart 2: Chinwel's weekly chart as at Feb 26, 2016 (Source: ShareInvestor)


Chart 3: Chinwel's monthly chart as at Feb 26, 2016 (Source: ShareInvestor) 

Conclusion

Based on good financial performance, reasonable valuation & bullish technical breakout, Chinwel could still be a good stock for long-term investment.

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, Chinwel.

2 comments:

wong said...

Hi bro. Can u comment on NIHSIN 7215 ?

Alex Lu said...

Hi wong,

Nishin is supported by a long term uptrend "line" at RM0.25. However its upside move is blocked by an intermediate downtrend line at RM0.36. Unless it can break above the RM0.36 mark, it is likely to pullback to RM0.25.

Its financial performance is erratic. It did well in QE30/9/2015 but the momentum fizzled out in QE31/12/2015. Thus I believe its price movement will weaken going forward.