Thursday, September 19, 2019

DLady: Attractive Enough?

DLady reported a poor set of result in QE30/6/2019. Its net profit dropped 49% q-o-q or 44% y-o-y to RM17 million. This was accompanied by revenue decline of 8% q-o-q or 4% y-o-y to RM244 million. The q-o-q profit decline was due to lower revenue, category product mix changes, coupled with strategic pricing, increase in raw material prices, negative forex changes and investment in advertising and promotional spend.

Table: DLady's last 8 quarters' financial performance

Following the poor results, DLady's share price began to tumble. As at yesterday, DLady has dropped nearly RM8 over  the past 2 weeks to RM56.70. The next strong support is at the horizontal line at RM50.00-51.00. 

Chart 1: DLady's weekly chart from 2012 to Sep 18, 2019 (Source:

I have overlaid 3 extreme moving average lines, i.e. the 100-week, 200-week and 250-week SMA lines (see Chart 1). The last time DLady went as low as the 250-week SMA line was during the Global Financial Crisis of 2008 (see Chart 2). DLady is now slightly below the 250-week SMA line (see Chart 1). 

Chart 2: DLady's weekly chart from 2003 to 2011 (Source:

If you owned this stock or planned to invest in it, the current price level is quite tempting. Among the reason given for the decline in profits is "investment in advertising and promotional spend". This item can be a wild card that has exaggerated its profit decline, and its absence could also help to swing the profits the other way. 

Based on past strong financial performance and steady market leadership, I believe DLady could be a good stock for long-term investment. To be on the safe side, we should wait for the results for the next quarter before taking an oversize position in the stock.

No comments: