WTHorse: Earnings Plummeted

Result Update

For QE30/6/2016, WTHorse's net profit dropped 77% q-o-q or 75% y-o-y to RM4.0 million while revenue was up 9% q-o-q or 0.5% y-o-y to RM186 million. Profits dropped q-o-q mainly due to the higher production and operating costs coupled with the weakening of Ringgit Malaysia against the foreign currencies.


Table: WTHorse's last 8 quarterly results


 Chart 1: WTHorse's last 44 quarterly results

Valuation

WTHorse (closed at RM2.16 yesterday) is trading at a PE of 20 times (based on last 4 quarters' EPS of 11 sen). At this PER, WTHorse is deemed overvalued.

Technical Outlook

WTHorse broke below its long-term uptrend line at RM2.20. The share price is likely to move sideways or downwards with immediate support at RM2.00.


Chart 2: WTHorse's monthly chart as at Aug 16, 2016 (Source: ShareInvestor)

Conclusion

Based on poorer financial performance, demanding valuation and negative technical outlook, I would rate WTHorse as REDUCE or SELL.

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.