Monday, November 26, 2007

Latitud announced a poor set of results for QE30/9/2007

Latitud's results for QE30/9/2007 was a disappointment. Its net profit dropped 48% q-o-q or 85% y-o-y to RM789k while its turnover declined 0.4% q-o-q or 3.8% y-o-y to RM102.3 million. The poor result is attributable to the following:
  1. lower production output due to the closure of the Ijok, Selangor plant while the output from its new Vietnam plant has yet to pick up sufficiently as commercial production has only commenced in June 2007;
  2. higher operating losses from its Thailand plant; and
  3. higher raw material cost & transport expenses.
Due to the above, Latitud incurred a pre-tax loss of RM786k as compared to a pre-tax profit of RM977k recorded in QE30/6/2007. After adding back tax credit of RM515k and minority interest of RM1.06 million, Latitud still managed to chalk up a small net profit of RM789k.

Latitud has rebounded off its strong horizontal support of RM1.20. While the poor financial performance in the last quarter may lead to short-term weakness for this stock, the past few weeks' share price movement could be indicating that Latitud's share price might have bottomed. Its recovery would have to wait, for now.

Chart: Latitud's daily chart as at November 23 (courtesy of Quickcharts)

I still believe that Latitud is still a good long-term buy at prices between RM1.20-1.30.

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