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Thursday, March 09, 2017

MUDA: Next Upleg Is Knocking


Results Update

Muda's result for QE31/12/2016 was released on Feb 23. Its net profit rose 82% y-o-y to RM18 million while its turnover rose 4% y-o-y to RM361 million. In the immediate preceding quarter, QE30/9/2016, Muda incurred a net loss of RM16 million due mainly to the write-off of inventory, warehouse & other assets of RM21.38 million resulting from a fire incident. If this write-off had not occurred, Muda would have report a net profit of about RM5.6 million.

For QE31/12/2016, Muda's revenue rose 28% q-o-q due mainly from higher revenue from the Trading Division - contributed about 80% of the increase- as a result of peak season for school bookshop operations in Singapore. The remaining increase in revenue came from the Paper Packaging Products division due to higher demand as a result of the festive season. As a result of the increased revenue, Muda's profits rose sharply.


Table: Muda's last 8 quarterly results


Chart 1: Muda's last 43 quarterly results
 

Valuation

Muda (closed at RM1.69 yesterday) is trading at a PE of 27 times (based on last 4 quarters' EPS of 6.16 sen). Excluding the losses from the fire in QE30/9/2016, Muda's last 4 quarters' EPS would be about 13.2 sen. That would lower its PER to about 13 times. At this adjusted PER of 13 times, Muda is deemed attractively valued.

Technical Outlook

Muda is pushing against the intermediate downtrend line, RR at RM1.70. If it can break above the RM1.70 level, Muda's next upleg may begin. (Note: AT the time of writing, Muda was trading at RM1.76.)


Chart 1: Muda's daily chart as at Mar 8,, 2017 (Source: MalaysiaStock.biz)

From Chart 2, we can see that Muda is well-supported by its long-term uptrend line, SS at RM1.40.


Chart 2: Muda's weekly chart as at Mar 8, 2017 (Source: MalaysiaStock.biz)

Conclusion

Based on good financial performance, fairly attractive valuation and bullish technical outlook, Muda's rating is now revised from SELL INTO STRENGTH to BUY.

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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