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Monday, August 08, 2016

F&N: Strong Earnings

Result Update

For QE30/6/2016, F&N's net profit rose 3.3% q-o-q or 12.8% y-o-y to RM93 million while revenue increased by 9.7% q-o-q or 1.8% y-o-y to RM1.10 billion. Revenue rose q-o-q due to increased revenue in F&B Malaysia of RM57.2 million & F&B Thailand of RM39.0 million. F&B Malaysia's revenue rose due to effective festival sell-in (supported by consumer-driven packaging formats);  favorable product portfolio mix and higher sell-in in June (brought on by earlier Hari Raya). Nevertheless, F&B Malaysia's operating  profit dropped from RM64.3 million to RM62.6 million mainly due to higher advertising and promotions expenditure and accrual for staff costs. F&B Thailand revenue increased due to its anniversary campaign. This helped to boost its operating profit from RM41.2 million to RM52.8 million. The higher operating profit led to higher pre-tax profit. (Note: F&N's result for QE30/6/2016 was announced on August 2, 2016.)
 

Table: F&N's last 8 quarterly results


Chart 1: F&N's last 39 quarterly results

Valuation
 
F&N (closed at RM24.50 last Friday) is now trading at a PE of 23 times (based on last 4 quarters' EPS of 107.10 sen). At this PE multiple, F&N is deemed fairly valued.

Technical Outlook

F&N broke out of its 5-year trading range between RM16.00 and RM19.00 in February this year.This brought on a sharp rally to RM27.00. Its current correction could lead to a prolonged sideways trading- possibly around RM24.00.


Chart 2: F&N's weekly chart as at Aug 5, 2016 (Source: ShareInvestor.com)
 

Chart 3: F&N's monthly chart as at Aug 5, 2016 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance, fair valuation and good prospect in near term, F&N remains a good stock for long-term investment.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post.
However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

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