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Thursday, March 16, 2017

BJFood: Earnings Still Weak

Results Update

For QE31/1/2017, BJFood's net profit dropped by 7% q-o-q or 37% y-o-y to RM4.7 million while revenue rose 10% q-o-q or 11% y-o-y to RM164 million. Revenue & PBT rose q-o-q mainly due to higher contribution from Starbucks operations in Malaysia. PAT however dropped due to disproportionate tax charge for the current quarter as a result of certain expenses or losses being disallowed for tax purposes, different foreign tax rate as well as non-availability of Group tax relief in respect of losses incurred by certain subsidiary companies.


Table: BJFood's last 8 quarterly results
 

Graph: BJFood's last 29 quarterly results 
 
Valuation

BJFood (closed at RM1.86 yesterday) is now trading at a PE of 38 times (based on last 4 quarters' EPS of 4.96 sen. At this PER, BJFood is deemed overvalued.

Technical Outlook

As posted earlier, BJFood broke above its intermediate downtrend line at RM1.80. This breakout may be the prelude to the next upleg for the stock.


Chart 1: BJFood's monthly chart as at Mar 15, 2017 (Source: ShareInvestor.com)


Chart 2: BJFood's daily chart as at Mar 15, 2017 (Source: ShareInvestor.com)
 
Conclusion

Based on weak financial performance & demanding valuation, I would maintain BJFood as a HOLD due to the bullish breakout of the downtrend line.

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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