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Monday, May 30, 2016

LTKM: Earnings Plummeted

Results Update

In QE31/3/2016, LTKM's net profit plummeted  97% q-o-q or 99% y-o-y to a mere RM0.137 million while revenue was down 10% q-o-q or 19% y-o-y to RM40 million. Profits declined sharply q-o-q due to the fall in egg prices.


Table 1: LTKM's 8 quarterly result


Chart 3: LTKM's 38 quarterly results

Valuation

LTKM (closed at RM1.56 yesterday) is now trading at a high PER of 17 times (based on last 4 quarters' EPS of 9 sen). However, with a Price to Book ratio of 0.9X (based on NTA of RM1.71 as at 31/3/2016), LTKM's downside is well-cushioned.

Technical Outlook

LTKM has been moving sideways, leaning on its 30-month EMA line. I expect this line and the line connecting the trough in December 2014 & September 2015 (AB) to provide support for the stock.


Chart 4: LTKM's monthly chart as at May 27, 2016 (Source: ShareInvestor.com)

Conclusion

Based on poor financial performance, overvaluation & bearish technical outlook, LTKM is rated as a SELL.

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, LTKM.

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