Magni: Earnings Dropped Sequentially

Results Update

For QE30/4/2016, Magni's net profit dropped 28% q-o-q but rose 14% y-o-y to RM18.8 million while revenue dropped 28% q-o-q but rose 10% y-o-y to RM194 million. Revenue dropped q-o-q due to 32%-drop in sales for garment segment, offset by a 4%-increase in sales for packaging segment. PBT decreased q-o-q mainly due to lower revenue and lower other operating income arising from higher currency exchange loss.

Table: Magni's last 8 quarterly results


Chart 1: Magni's last 29 quarterly results

Valuation

Magni (trading at RM4.12 yesterday) has a trailing PE of 8.16 times (based on last 4 quarters' EPS of 50.46 sen). At this PER, Magni's valuation is still fairly attractive. 

Technical Outlook

Magni is in a long-term uptrend. MACD is curving down a bit but is still comfortably above the MACD signal line. ADX is is curving down a bit and threatening to cut below the ADXR. Both readings suggest that a temporary top may be at hand.


Chart 2: Magni's monthly chart as at Jun 23 2016 (Source: ShareInvestor.com)

The daily chart shows that Magni has just broken to the downside of a symmetrical triangle. If it continue to slide below the psychological support at RM4.00, it may dipped to test the 20-month EMA line support at RM3.50. (Note: MAgni is now trading at RM4.07 as at 4.45pm).


Chart 3: Magni's daily chart as at Jun 23 2016 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance and attractive valuation, Magni remains a good stock for long-term investment. However if you wish to sidestep a temporary decline, you may consider a trading SELL if the stock drops below the RM4.00 mark & re-enter at RM3.50-3.60.

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, Magni.