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Thursday, February 23, 2017

Petronm: A Bumper Profit (Updated)

Results Update

For QE31/12/2016, PetronM's net profit rose 141% q-o-q or 558% y-o-y to RM113 million owhile revenue rose 26% q-o-q or 22% y-o-y to RM2290 million. Revenue rose y-o-y due to 14%-increase in crude oil (from USD58 to USD40 per barrel) and 13%-increase in sales volume from 7.3 million to 8.3 million barrels. PBT increased due to improvement in price differential between the finished products and processed crudes.


Table: PetronM's last 18 quarterly results (updated)


Graph: PetronM's last 18 quarterly results

Valuation

PetronM (closed at RM4.63 yesterday) is now trading at a PER of 5.3 times (based on annualized EPS of 88 sen). At this PER, PetronM is deemed fvery attractive.

Technical Outlook (Updated Commentary)

PetronM broke above the trading range (ABCD) at RM4.50 3 weeks ago. After it rallied to RM5.20, it pulled back to RM4.50 again. The breakout of the trading range signals the start of the continuation of the prior uptrend.


Chart 1: PetronM's weekly chart as at Feb 22, 2017 (Source: ShareInvestor,com) (updated)

The interesting question is whether Petronm can test the upper line of its upward channel. If it can do so - let alone breaking thru it - Petronm may go above its early 2016 high of RM7.20 to RM8.00.


Chart 2: PetronM's monthly chart as at Feb 22, 2017 (Source: ShareInvestor,com) (updated)

Conclusion

Based on improved financial performance, attractive valuation  & positive technical outlook, PetronM could be a good stock for a medium-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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