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Monday, March 28, 2016

NTPM: Earnings Grew on Stronger MYR

Result Update

For QE31/1/2016, NTPM's net profit increased by 4% q-o-q or 33% y-o-y to RM17.7 million while revenue was increased by 6% q-o-q or 13% y-o-y to RM161 million. Revenue increased q-o-q mainly due  increased sales of tissue products and baby diapers. Profit before  taxation increased q-o-q mainly due to "lower loss on foreign exchange of approximately RM0.6 million due to the weakening of MYR against major trading currencies such as US Dollars and Singapore Dollars as compared to a loss of RM2.1 million in the preceding quarter".  (Note: My understanding is that the company has been hedging its forex risk for its SGD & USD denominated export proceed. The forward contract rates had been rising; for SGD-MNYR from 2.949 to 3.064 in last 2 quarters and for USD-MYR from 3.860 to 4.000. With the strengthening MYR, the forex losses will turn into a gain; thus boosting its bottom-line. This should not be a major consideration since the gains or losses from forex are not very substantial.)


Table: NTPM's last 8 quarterly results

In QE31/10/2015, NTPM's quarterly net profit surpassed the previous highest level of RM16.6 million recorded in QE31/1/2010. Last quarter, the net profit continued to trend higher.


Chart 1: NTPM's last 42 quarterly results

Valuation

NTPM (closed at RM1.06 last Friday) is now trading  at a PE of 19.2 times (based on last 4 quarters' EPS of 5.5 sen). At this PER, NTPM is deemed fairly valued.

Technical Outlook

NTPM is in a long-term upward channel, with support at RM0.75 and resistance at RM1.20-1.30. MACD & ADX are hooking up, which are supportive of the current rally.


Chart 2: NTPM's monthly chart as at Mar 25, 2016(Source: ShareInvestor.com)

Conclusion

Based on satisfactory financial performance & positive technical outlook, NTPM's rating is maintained as a BUY.

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, NTPM.

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