Friday, November 18, 2016

Cepat: Earnings Jumped


Cepatwawasan Group Bhd ('Cepat') is cultivating oil palm and operating palm oil mills; operating biomass & bio-gas renewal energy power plants and sells oil palm products.

via Company's website

Result Update

For QE30/9/2016, Cepat's net profit increased by 105% q-o-q or 187% y-o-y to RM10.4 million while turnover rose 54% q-o-q or 8% y-o-y to RM79 million.

Despite a drop in construction income of RM29.95 million arising from the recognition of IC Interpretation 12 Service Concession Agreements for the Power Plant segment as compared to the preceding year corresponding quarter, revenue rose by RM5.55 million to RM79.08 million y-o-y mainly due to an increase in both sales volume and prices of CPO and PK. Sales volume of CPO and PK increased by 31% and 39 % respectively whereas price of CPO and PK increased by 26% and 89% respectively.

Profit before tax rose RM8.88 million to RM14.38 million y-o-y mainly due to an increase in CPO and PK price by 26% and 89% respectively and a corresponding increase in FFB price by 42%.

Performance of the respective operating business segments on y-o-y basis are as follows:
  • Plantation – The increase in profit before tax by RM6.27 million (>100%) mainly due to higher FFB price by 42%.
  • Oil Mill – The increase in profit before tax by RM1.79 million (>100%) from loss before tax of RM0.05 million to a profit before tax of RM1.74 million was mainly due to higher milling margin and higher CPO and PK sales volume by 31% and 39% respectively as well as higher CPO and PK price by 26% and 89% .
  • Renewable Energy Power Plant – The increase in profit before tax by RM1.99 million (>100%) mainly due to increase in efficiency and export of electricity by 29%. The 12MW Biomass Power Plant generated and exported 15,715,635 kWh for this current quarter as compared to 12,170,697 kWh in the corresponding preceding quarter.
(Note: The results was announced on October 20, 2016.)

Table 1: Cepat's last 8 quarterly results

Graph 1: Cepat's last 40 quarterly results


Cepat (at RM0.875 as at end of morning session) is trading at a PE of 18.6 times (based on adjusted last 4 quarters' EPS of 4.76 sen). However, if Cepat can maintain its earning similar to the last 2 quarters, then its full-year EPS would be about 10 sen. Its PER would be at a decent 8.8 times.

Technical Outlook

Cepat broke above its intermediate downtrend line, RR at RM0.72 in late October. On November 11, it broke above the resistance from the horizontal line at RM0.82. Its immediate resistance will be at RM0.95 and beyond that at RM1.05.

Chart 1: Cepat's daily chart as at November 16, 2016 (Source: Chartnexus)

Chart 2: Cepat's weekly chart as at November 16, 2016 (Source: Chartnexus)


Based on improving financial performance & bullish technical outlook, Cepat could be a good stock for Trading BUY.

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.


Chong BoonKee said...

Hi Alex,

Based on your experience, SGX listed Indonesia palm oil stock and Bursa listed palm oil stock, which is better?
I owned Indofood Agri.

Alex Lu said...

Hi Chong BoonKee

I can't answer your question because I don't monitor SGX stocks. I just had a quick look at the price chart of Indofood (5JS) and its last 10-year profit track record. I came to this conclusion:

1. Indofood's profit, which has been trending lower after FY2011, could have bottomed in FY2015. With better CPO prices, profit may rise in FY2016.

2. Indofood is trading at an attractive 0.8 time its NAV.

3. presently, it's trading not far from the low of 2015 of S$0.40. The latter was almost as low as the 2008 low of S$0.37.

4. If Indofood can break above S$0.65, I believe the upleg will begin.

Based on the above, Indofood (at S$0.51) is considered a good stock for long-term investment.