For QE30/6/2019, TChong's net profit rose 22% q-o-q or 57% y-o-y to RM19 million while revenue dropped 1% q-o-q or 2% y-o-y to RM1.067 billion. The automotive revenue rose 1.3% y-o-y to RM2,096.6 million and EBITDA rose 46.9% y-o-y to RM149.6 million. Automotive division recorded a 1.3%-decline in revenue to RM1,041.7 million, while EBITDA has improved by 16.2% to RM80.4 million. The lower revenue was due to stiff competition in the automotive market. EBITDA improved due to favorable sales model mix.
Table: TChong's last 8 quarterly results
Graph: TChong's last 49 quarterly results
As at 30/6/2019, TChong's financial position is deemed satisfactory with current ratio at 1.4 times and gearing ratio at 1.0 time.
TChong (closed at RM1.45 yesterday) is now trading at a trailing PER of 7.9 times (based on last 4 quarters' EPS of 18.37 sen). At this PER, TChong is trading at a fairly reasonable value for a turnaround stock.
TChong appears to be making a base at around RM1.30-1.40. Immediate resistance will be at the psychological RM1.50 mark and thereafter at the horizontal line at RM1.65.
Chart 1: TChong's daily chart as at Aug 20, 2019 (Source: Malaysiastock.biz)
Chart 2: TChong's monthly chart as at Aug 20, 2019 (Source: Malaysiastock.biz)
Based on improved financial performance, satisfactory financial position and fair valuation, TChong could be a good stock for recovery play.
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