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Wednesday, February 22, 2017

Pharma: Earnings Plunged

Results Update  (annjoo)

For QE31/12/2016, Pharma's net profit dropped 80% q-o-q or 83% y-o-y to RM4 million while revenue rose 13% q-o-q but dropped 14% y-o-y to RM582 million. Revenue dropped y-o-y mainly due to reduced orders from the concession business, notwithstanding improved contributions from the Indonesian operations and private sector business. As a result of lower revenue and higher finance costs, Pharma posted a lower profit before tax (PBT) of RM4 million. After booking in a deferred tax charge of RM4.27 million, Pharma incurred a net loss of RM900k.

Table: Pharma's last 8 quarterly results


Graph: Pharma's last 41 quarterly results

Valuation

Pharma (closed at RM5.05 yesterday) is now trading at a PER of 29x (based on last 4 quartres' EPS of 17.61 sen).At this PER, Pharma is overvalued.

Technical Outlook

 Pharma is now resting on its uptrend line with support at RM5.00. If this support is violated, Pharma may go into a downtrend. Its next support may come from the horizontal lien at RM4.00.


Chart: Pharma's monthly chart as at Feb 21, 2017 (Source: ShareInvestor.com)

Conclusion

Based on poor financial performance and demanding valuation, Pharma is a stock to avoided. Its only saving grace is that it's now hanging onto a strong technical support. If that support goes, its fall will begin.

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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