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Wednesday, April 20, 2016

Kianjoo: Proposed Business Sale Cancelled!

Latest Corporate Development

Last Friday, Kianjoo announced the cancellation of its proposed business sale to Aspire Insight Sdn Bhd (go here for the Bursa announcement and here for the Star newspaper report). For those who have been following Kianjoo saga for the past 15-20 years, we all breathed a sigh of relief.

Kianjoo has always been a financially healthy company with profitable performance. Its financial performance and share price performance over the past 10 years could have better if not for the See family quarrel which was finally resolved when the controlling stake was sold off to Canone. With a more focused management team, investors were looking to Kianjoo's return to its heyday again. That dream was cut short by the earlier proposed business sale, which has now been cancelled. 

Investors would once again have the opportunity to invest in this stock; a stock that holds a long & rich history. 

Result Update

For QE31/12/2015, Kianjoo's net profit dropped by 47% q-o-q or 34% y-o-y to RM23 million while revenue increased by 13% q-o-q or 31% y-o-y to RM460 million. PBT dropped due to forex losses incurred of RM4.3 mil as compared to forex gain of RM35.1 mil in QE30/9/2015. Revenue rose q-o-q due to increased demand from customers in the FMCG segment due to the pre-festive season production need. (Note: The QE31/12/2015 was announced on March 14, 2016.)


Table 1: Kianjoo's last 8 quarterly results


Chart 1: Kianjoo's last 36 quarterly results
[Note: P&L diagram displays chronological order from left to right.]
 
Valuation

Kianjoo (closed at RM3.26 yesterday) is now trading at a PE of 11 times (based on last 4 quarters' EPS of 29.6 sen). At this multiple, Kianjoo is deemed attractively valued. However, its FY2015 earnings were boosted by forex gain of RM35.3 million. If this exceptional gain were excluded, its EPS would be lowered to 21.6 sen while its PER would be pushed up to 15 times. At this adjusted PER, Kianjoo is deemed fairly valued.

Technical Outlook

Kianjoo is in an "uptrend" line with support at RM3.10. Resistance will be at RM3.40.


Chart 2: Kianjoo's monthly chart as at April 19, 2016 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance, reasonable valuation & positive technical outlook, Kianjoo is a good stock to consider 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, Kianjoo.

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