MAGNI: Earnings Rebounded

Results Update

For QE31/7/2016, Magni's net profit rose 25% q-o-q or 51% y-o-y to RM23.5 million while revenue rose 40% q-o-q or 40% y-o-y to RM271 million. Revenue increased q-o-q due to 48%-increase in sales for garment segment but a slight 2%-drop in sales for packaging segment. PBT increased by 29% q-o-q due to 33%-increase PBT for Garment which was mainly due to higher revenue and higher currency exchange gain, partially weighed down by higher operating expenses while PBT for Packaging dipped by 14.3% which was mainly due to the cumulative effect of lower revenue and higher operating expenses.

Table: Magni's last 8 quarterly results


Chart 1: Magni's last 30 quarterly results

Valuation

Magni (trading at RM4.15 last Thursday) has a trailing PE of 7.5 times (based on last 4 quarters' EPS of 55.35 sen). Its last 2 years' earning CAGR was at 45%; giving the stock a PEG ratio of 0.2x. At this PEG ratio, Magni's valuation is still very attractive. 

Technical Outlook

Magni is in a long-term uptrend. There are negative technical reading; MACD has just crossed below its MACD signal line and ADX has hooked down. Both are signaling a possible correction in the near term.


Chart 2: Magni's monthly chart as at Sep 15 2016 (Source: ShareInvestor.com)

The weekly chart shows that Magni is moving in a gradual downward channel, with support at RM3.80 & resistance at RM4.40. MACD looks poised to cross above the MACD signal line. 


Chart 3: Magni's daily chart as at Sep 15 2016 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance and attractive valuation, Magni 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.