Pelikan- how low can it go?

Pelikan has just announced its results for 3Q2008 ended 30/9/2008, where its net profit dropped by 64% q-o-q or 29% y-o-y to RM15.8 million. Turnover increased by 14% y-o-y to RM340 million from RM299 million previously, but was lower than the preceding quarter's turnover of RM407 million. The drop in Pelikan's financial performance for 3rd quarter vis-a-vis its 2nd quarter was due to seasonality factor, where its stationery business would normally receive a boost from “back to school” sale in Europe in the middle of the year.



Pelikan's share price rose from RM0.65-70 in 2004 to a high of RM5.80 in July 2007. Since then, the share price has been sliding off. It made a recent low of RM1.11 on October 30th, before rebounding. Yesterday, the share price surpassed the recent low to close at RM1.07. The monthly chart is attached below.


Chart: Pelikan's monthly chart as at Nov 19, 2008 (source: Quickcharts)

Based on its closing price of RM1.07 yesterday, Pelikan is now trading at a PE of 4.3 times (using its last 4 quarters' EPS totaling 25 sen). In addition, it is trading at a Price to Book of only 0.57 times (using its NTA per share of RM1.89 as at 30/9/2008). At these multiples, Pelikan is deemed very attractive.

As such, Pelikan could be a good defensive stock for long-term investing.