MFCB: Earning Increased

Result Update

For QE30/9/2016. MFCB's net profit rose 35% q-o-q or 35% y-o-y to RM36 million while revenue rose 9% q-o-q or 48% y-o-y to RM215 million. Net profit rose more than the increase in PBT due to lower effective tax rate - mainly due to the lower effective tax rate for construction profit from the Don Sahong Hydropower project, foreign exchange translation gains which are non-taxable and over-provision of income tax in the previous financial year- and foreign currency translation difference for foreign operations of RM8.0 million and fair value changes of available-for-sale financial assets of RM3.3 million.

 
Table: MFCB's last 10 quarterly results


Graph: MFCB's last 13 quarters' P&L 

Valuation

MFCB (closed at R2.34 last Friday) is now trading at a trailing PER of 6.7x (based on last 4 quarters' EPS of 34.99 sen).MFCB enjoys steady growt, with earnings CAGR of 20% in the past 2 years. This gives the stock a PEG ratio of less than 1 time.

Technical Outlook

In October, MFCB has broken above the resistance from the horizontal line at RM2.12. This breakout could send the stock to RM2.50.


 Chart: MFCB'sweekly chart as at Nov 25, 2016 (Source: Chartnexus)

Conclusion

Based on good financial performance, attractive valuation and bullish technical outlook, MFCB is 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.