Sunday, May 19, 2019

Kotra: Earnings Improved on Better Cost Control

Result Update

In QE31/3/2019, Kotra's net profit rose 7% q-o-q or 41% y-o-y to RM5.2 million while its revenue dropped 10% q-o-q or 9% y-o-y to RM41 million. The Group's revenue dropped q-o-q mainly due to lower sales of health supplement products to both the local and export markets and decrease in tender supply to local markets in current quarter. The Group's profit before tax rose q-o-q mainly due to rationalization of selling and administration expenses and lower advertisement & promotional expenses incurred in current quarter.


Table: Kotra's last 8 quarters' P&L


Graph: Kotra's last 49 quarters' P&L

Latest Financial Position

As at 31/3/2019, N2N's financial position is satisfactory, with current ratio of 2.4x and gearing ratio of 0.48x.

Background

Kotra is involved in manufacturing & trading of pharmaceutical and healthcare products. 

Kotra's MD, Jimmy Piong Teck Onn & the group's range of products

You can read about this group 's plan in 2018 (here). I post about Kotra once in October 2006 (here).

Valuation

Kotra (closed at RM1.71 last Friday) is now trading at a PER of 11x (based on last 4 quarterly EPS of 15.62 sen). At this PER, Kotra is deemed fairly attractive.

Technical Outlook

Kotra has been range-bound between RM1.60 & RM1.80 for the past 2 years. An upside breakout of the range at RM1.80 could set the stage for an upswing in the share price. Alas, there is no sign yet that this is about to happen.


Chart: Kotra's monthly chart as at May 17, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on satisfactory financial performance, satisfactory financial position and fairly attractive valuation, Kotra could be 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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