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Sunday, May 28, 2017

Ptaras: Poor Earnings Due to CNY

Results Update

In QE31/3/2017, Ptaras's net profit dropped 25% q-o-q or 19% y-o-y to RM8.4 million while revenue was mixed- down 12% q-o-q but rose 81% y-o-y to RM53million. Revenue dropped q-o-q due to lower contribution from the construction division as some on-going projects were at the tail end coupled with fewer working days during the CNY period  as well as lower investment income. However, contribution from the manufacturing division remained high.


Table: Ptaras's last 8 quarterly P&L

For 9-month ended 31/3/2017, revenue increased by 79% to RM172.1 million from RM95.9 million in the preceding year. Correspondingly, the PBT of RM41.6 million outperformed earnings for the same period last year by 155%, spurred mainly by better performance from the construction division as well as higher investment income. The construction division achieved a substantially higher revenue of RM148.8 million compared to RM70.4 million last financial year. Consequently, PBT soared by 336% to RM30.5 million from RM7.0 million last financial year. The increase in revenue and PBT were mainly due to increased volume of construction works. Revenue in the manufacturing division reduced by 9% to RM23.3 million from RM25.6 million compared to last financial year. The decline was mainly due to lower sales volume as well as lower selling prices. Nevertheless, the manufacturing division achieved a better PBT of RM3.9 million compared to RM3.6 million previous financial year, primarily due to lower material costs.


Graph: Ptaras's last 41 quarterly P&L

Financial Position

Ptaras's financial position is deemed very healthy as at 31/3/2017. Current ratio and gearing ratio stood at 0.21x and 0.21x respectively. Its cash in hand stood at RM163 million or RM1.00 per share.

Valuation

Ptaras (closed at RM3.87 last friday) is now trading at a PER of 16.6 times (based on last 4 quarters' EPS of 23.3 sen). If the cash in hand is deducted from the share price, then PER is lowered to 12.3 times. Based on this, Ptaras is deemed fairly valued.

Technical Outlook

Ptaras broke above the strong horizontal resistance at RM3.75 two weeks ago. This bulliah breakout could signal the begin of its next upleg.


Chart 1: Ptaras's weekly chart as at May 26, 2017 (Source: Shareinvestor.com)

Ptaras is still in its long-term uptrend line, with a possible hook-up in the monthly MACD. It certainly has come a long way since I first called a BUY on the stock in 2009 (here).


Chart 2: Ptaras's monthly chart as at May 26, 2017 (Source: Shareinvestor.com)

Conclusion
 
Based on satisfactory financial performance, attractive valuation & bullish technical outlook, Ptaras remains a good stock for long-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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