Dufu: Earnings Dropped Sharply

Result Update

For Q31/3/2019, Dufu's net profit dropped 72% q-o-q or 28% y-o-y to RM4.2 million while revenue dropped 22% q-o-q or 6% y-o-y to RM49 million. Profits dropped mainly due to the decreased in revenue, unfavorable foreign exchange rate and lower production output which has resulted in higher absorption fixed overhead costs.


Table: Dufu's last 8 quarterly result


Graph: Dufu's last 23 quarterly result

Financial Position

Dufu's financial position as at 31/3/2019 is deemed healthy. Its current ratio and gearing ratio stood at 4.6 times and 0.3 times respectively.

Valuation

Dufu (closed at RM1.70 yesterday) is now trading at a trailing PER of 8.3x (based on last 4 quarters' EPS of 20.43 sen). At this PER, Dufu is deemed fairly attractive.

Technical Outlook

Dufu has been sideways (with a slight upward bias) for the past 4  months. The current price decline will likely test the lower price range of RM1.55.


Chart: Dufu's daily chart as at May 7, 2019 (Source: Malaysiastock.biz)

Conclusion

Despite poor financial performance last quarter, Dufu is still a good stock for long-term investment based on healthy financial position and fairly attractive valuation.

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.