Kimlun has tumbled about 36% from RM2.00 in early May to RM1.27 yesterday. Is this stock worth investing?
For QE30/6/2018 (2Q2018), Kimlun’s net profit dropped 22% q-o-q or 33% y-o-y to RM10 million while revenue was mixed - dropped 1% q-o-q but rose 12% y-o-y to RM218 million.
Table: Kimlun's last 8 quarters' P&L accounts
Graph: Kimlun's last 22 quarters' revenue, profits & profit margins
Kimlun's financial position is deemed adequate with good liquidity position (current ratio was at 1.7 time) but gearing ratio was elevated at 1 time.
Current Year Prospects
This is taken from the Notes to the latest Financial Statements:
The Group has an estimated construction and manufacturing balance order book of approximately RM1.7 billion and RM0.4 billion respectively as at 30 June 2018, contributed by numerous construction contracts and supply contracts. The balance order book provides a good earnings visibility to the Group and is expected to keep the Group busy for the next 2 years. (Emphasis mine)Valuation
Kimlun (closed at RM1.27 yesterday) is now trading at a PER of 6.8 times (based on last 4 quarters’ EPS of 18.8 sen). At this PER, Kimlun is deemed fairly attractive.
Kimlun has dropped very near to its long-term uptrend line support at RM1.20.
Chart: Kimlun's weekly chart as at Sep 6, 2018_4.00pm (Source: Malaysiastock.biz)
Despite a slightly weaker financial performance, Kimlun is a good stock for long-term investment based on clear earning visibility, reasonably healthy financial position and fair valuation.
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