For QE31/3/2017, Ulicorp's net profit dropped 38% q-o-q or 50% y-o-y to RM3 million while revenue was mixed - down 7% q-o-q but up 4% y-o-y to RM46 million. Revenue dropped q-o-q for both the Cable Support Sytems & Electrical Lighting & Fittings segments. Profit before taxation dropped q-o-q mainly due to lower revenue generated, lower interest income arising from placement of fixed deposits, higher administration costs, higher repair and maintenance of plant and machinery, higher depreciation/amortization costs and lower profit margin achieved on goods sold during the quarter under review. (The latest quarterly result was announced on May 25.)
Table: Ulicorp's last 10 quarterly results
Graph: Ulicorp's last 15 quarterly results
Ulicorp (closed at RM4.50 last Friday) is now trading at a trailing PER of 23x (based on last 4 quarters' EPS of 19.23 sen). At this PER, Ulicorp is deemed overvalued for a stock that's no longer a growth stock.
Ulicorp suffered a sharp selldown in August 2015. The stock dropped form RM6.50 to its horizontal support of RM3.50. Its immediate support comes from the horizontal line at RM4.50 while the immediate resistance comes from the horizontal line at RM5.00.
Chart: Ulicorp's weekly chart as at Jun 2, 2017 (Source: Shareinvestor.com)
Based on weak financial performance and high valuation , I revised my rating for Ulicorp from a HOLD to SELL INTO STRENGTH.