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Sunday, June 04, 2017

Hevea: Earning Remained Healthy

Results Update

For QE31/3/2017, Hevea's net profit was mixed - down 10% q-o-q or up 25% y-o-y - to RM25 million while revenue rose 9% q-o-q and % y-o-y to RM1519million. Profits rose y-o-y due mainly to better performance in both the particleboard (due mainly to better margin brought on by higher selling price, increased sales of higher grade products, increased sales in value added products and higher USD exchange rate to Ringgit during this reporting period) and RTA sectors (due mainly to benefits derived from the more efficient production processes, higher revenue, and higher USD exchange rate to Ringgit.) [The result for QE31/3/2017 was announced on May 23.]


Table: Hevea's last 8 quarterly results


Graph: Hevea's last 38 quarterly results

Valuation


Hevea (closed at RM1.37 last friday) is now trading at a PE of 7.6 times (based on last 4 quarters' EPS of 17.8 sen. At this PER, Hevea is still deemed very attractive. In addition, Hevea pays a decent dividend, with yield of 3.4%.

Technical Outlook

Hevea is in a steep uptrend line, SS with support at RM1.35 (see Chart 1). the immediate support is at the line connecting the recent trough at RM1.25-1.30 (see Chart 2).


Chart 1: Hevea's monthly chart as at Jun 2, 2017  (Source: ShareInvestor)


 Chart 2: Hevea's weekly chart as at Jun 2, 2017  (Source: ShareInvestor)

Conclusion

Based on good financial performance, relatively attractive valuation & positive technical outlook, Hevea 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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