Advertisement

Monday, May 30, 2016

PIE: Earnings Plummeted

Result Update

For QE31/3/2016, PIE's net profit dropped 86% q-o-q or 79% y-o-y to RM2 million while revenue was mixed- dropped 54% q-o-q but rose 8% y-o-y to RM120 million. Revenue dropped 54% q-o-q due to lower  demand  for  electronics  manufacturing products and raw wire & cable products but partly offset with higher revenue achieved by wire harness activities. PBT dropped 93% q-o-q due to lower revenue achieved, lower margin of product mix and losses from foreign currency exchange transactions. However, the decrease in profit was partly offset by lower operating expenses and reversal of slow-moving inventories provision.


Table: PIE's last 8 quarterly results


Chart 1: PIE's last 32 quarterly results

Valuation

PIE (closed at RM13.14 last Friday) is now trading at a PE of 24 times (based on last 4 quarters' EPS of 53.4 sen). At this multiple, PIE is deemed overvalued.

This big rally over the past 7-8 months was not supported by any increase in earnings! If the rally was based on better prospects future or exciting new projects, the huge drop in earnings should give pause for thoughts to its shareholders.

Technical Outlook

PIE broke above the strong resistance at the horizontal line of RM7.00 in October 2015 and rallied to about RM14.00 today. PIE is resting on its 10-week SMA line. The only sign of weakness is the MACD crossing below its MACD signal line.


Chart 2: PIE's weekly chart as at May 27, 2016 (Source: Shareinvestorcom)
 

Chart 2: PIE's monthly chart as at May 27, 2016 (Source: Shareinvestor.com)

Conclusion

Based on weak financial performance & full valuation, I would rate PIE 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, PIE.

No comments: