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Thursday, May 19, 2016

Huayang: Earnings Dropped

Results Update

For QE31/3/2016, Huayang's net profit dropped 29% q-o-q or 28% y-o-y to RM21 million while revenue dropped 18% q-o-q or 16% y-o-y to RM128 million. Revenue and profits dropped due to weaker sales- as a result of subdued consumer sentiments.


Table: Huayang's last 8 quarterly results


Chart 1: Huayang's last 29 quarterly results 

We can see from the chart below that Huayang's unbilled sales has dropped back sharply last quarter. In QE31/3/2016, unbilled sales stood at slightly over 3.5 quarters.

 
Chart 2: Huayang's last 5 years of 4Q's sales book 

Valuation

Huayang (at RM1.82 yesterday) is trading at a PE of 4.3 times (based on last 4 quarters' EPS of 41.7 sen). At this PE, Huayang is still deemed fairly attractive.

Technical Outlook
 
Huayang is hanging onto to the horizontal line at RM1.75-1.80 very well.
 

Chart 2: Huayang's monthly chart as at May 18, 2016 (Source: ShareInvestor.com)

Conclusion

Despite weaker financial performance & thinner sales book, Huayang is still a good stock for long-term investment based on attractive valuation. 

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, Huayang.

5 comments:

Jessie Ma said...

Long term mean more than 12 months?

Jessie Ma said...

Alex , how you see Mitra?
Thank:

Alex Lu said...

Hi Jessie,


To answer your first question on time frame, I refer you a reply by a blog writer to a question posed by a reader on his weblog, Colin Nicholson: Building Wealth Through Shares. Firstly, we need to make a distinction between trading and investing and then we split up in this way:

Day Trading - trades are opened and closed within a day. No positions are carried over night. Short term for a day trader is seconds or minutes. Medium term is tens of minutes to maybe an hour or so. Long term is hours.

Short-Term Trading - trades last from part of a day up to several days. Short term will be a few hours to maybe one or two days. Medium term will be a few days. Long term will be several days to maybe a couple of weeks.

Position/Swing Trading - trades last from several weeks to several months and may even be held for a few years at the outside. Short term will be a week or more. Medium term will be several weeks to a month or more. Long term will be several months out to a year or more.

Long Term Investing - Investments last from a few years to many years. Short term will be a few years. Medium term will be a few years out to maybe a decade. Long term will be a decade to several decades. The link is given below.

John Murphy defines short-term as a few weeks (say, 1-3 weeks), medium-term as a few months (say, 1-3 months) and long term as a few years (say, 1-3 or 1-5 years). That leaves some gaps to be filled up; like 1-5 days or 3-12 months or more than 3 or 5 years. We may call these very short-term, intermediate term or very long term. I don't think there is hard & fast rules how to categorize time frame.

The link: http://www.bwts.com.au/index.cfm/resources/ask-colin/721-what-is-the-difference-between-long-term-medium-term-and-short-t/

Alex Lu said...

Jessie Ma said...


Mitra broke above the line connecting its peaks for the past 12 months at RM1.30-1.33. In fact, the price action over the past 8 months resembles an ascending triangle, which is a bullish formation. In addition, the bullish outlook for Mitra is also reflected in the charts for its two warrants, WC & WD.

In line with the above, Mitra looks like a good trading BUY at RM1.30-1.33. However, if the share were to break below that level, then the short-term outlook would be negative.

Jessie Ma said...

Thank Alex for your well explained above. Bravo