For QE31/10/2017, BAuto's net profit increased 10% q-o-q to RM22 million while revenue rose 21% q-o-q to RM472 million. Compared to the same quarter last year, net profit dropped 46% on a 4%-decline in revenue. Group revenue rose q-o-q mainly due to higher sales volume arising from the newly launched CX-5 model in both domestic and the Philippines market since the beginning of October 2017. Profits rose q-o-q primarily due to improvement in unit sales from the new CX-5 at full margin in both domestic and the Philippines operations.
Table: BAuto's last 8 quarters' financial performance
Graph: BAuto's last 22 quarters' financial performance (with profits changes capped at 100% on the left [A] and profit uncapped on the right [B])
BAuto (closed at RM2.15 last Friday) has a fair PER of
BAuto has broken to the upside of its large triangle at RM2.05 in early September. Thereafter it has been trading sideways between RM2.00 & RM2.13. Last Friday, it broke above that trading range (or, above the line connecting the peaks for past 2 months, AB). This could be the signal for the next upleg in the share price.
Chart 1: BAuto's weekly chart as at Dec 8, 2017 (Source: Malaysiastock.biz)
Chart 2: BAuto's daily chart as at Dec 8, 2017 (Source: Malaysiastock.biz)
Based on improved financial performance and mildly bullish technical outlook, I revise the rating for BAuto from a REDUCE to a HOLD. If you wish to trade the technical breakout, you may do so but you may have to set a stop loss in case the breakout fails. Good luck!
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