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Thursday, May 25, 2017

Coastal: Earning Soared!

Result Update

For QE31/3/2017, Coastal's net profit rose more than 4 times q-o-q or 64% y-o-y to RM27 million while revenue was mixed- up 11% q-o-q but down 67% y-o-y to RM64million. The Group reported a higher profit before tax of RM31.5 million in QE31/3/2017, an increase of over 2 times q-o-q from RM9.1 million, owing to higher operating margin earned as well as incidental income derived from the charter of JUGCSU. Profit before tax has leaped 69% y-o-y from RM18.6 million. The better showing was principally due to lower share-based payment expenses recognized and higher income generation from the charter of JUGCSU.


Table: Coastal's last 8 quarterly results


Graph: Coastal's last 51 quarterly results 

Valuation

Coastal (closed at RM1.36 yesterday) is now trading at a PE of 15 times (based on last 4 quarters' EPS of 9.03 sen). If the EPS for QE31/3/2017 can be maintained, Coastal's full-year EPS would be about 20 sen. This means Coastal's PER going forward could be lowered to 7 times! At this PER, Coastal looks attractive.

Technical Outlook

Coastal may have found strong support at the horizontal line at RM1.20. Its immediate resistance will be at the horizontal line at RM1.50. From MACD & ADX indicators, I surmise that Coastal has found its bottom and is poised for recovery.


Chart: Coastal's monthly chart as at May 24, 2017 (Source: Shareinvestor.com)

Conclusion

Based on satisfactory financial performance, Coastal is now a good stock for long-term investment. I revise my rating from a HOLD to a SLOW ACCUMULATION.

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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