Thursday, February 26, 2009

Maybulk's net profit dropped

Maybulk has just announced its results for 4Q2008. Its net profit dropped by 98% q-o-q and y-o-y to RM3.2 million, while turnover dropped 36% q-o-q or 28% y-o-y to RM138 million. Maybulk reported an operating loss (excluding gain from the disposal of vessels) of RM20 million as compared to an operating profit (excluding gain from the disposal of vessels) of RM36 million for 3Q2008 or RM126 million for 4Q2007.



Maybulk's average operating results is probably between the small operating loss in 4Q2008 & the huge operating profit of 4Q2007; thus about RM106 million per quarter, or RM424 million per annum. After deducting corporate tax (say, 25%), its net profit is about RM318 million. The other income contributor going forward is the newly-acquired 22.08% stake in PACC Offshore Services Holdings Pte Ltd (POSH) [costing US$221mil (RM802mil)]. Let's assume this give a dividend yield of 5%; thus an income of RM40 million per annum [RM802 million multiplied by 5%]. So, Maybulk's total net profit is about RM358 million, or EPS of 36 sen. This of course looks too optimistic in the current economic environment, but we will stay with this estimate for now.

Shipping business is very cyclical and I think it should command a PE multiple of 6 to 10 times, depending on the economic cycle. If I were to use a PE multiple of 8 times & the average EPS of 36 sen (as per above calculation), then Maybulk's fair value if about RM2.88.

From the charts below, we can see that Maybulk share price is approaching its medium-term downtrend line resistance at RM3.10. The RM3.00 psychological resistance is another hurdle that may block the rise of this stock.


Chart 1: Maybulk's daily chart from Feb 25, 2009 (source: Tradesignum.com)


Chart 2: Maybulk's weekly chart as at Feb 25, 2009 (source: Quickcharts)

Based on the valuation & technical considerations, I believe that it is a good time to take some profit on your Maybulk investment.
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6 comments:

  1. aLanThursday, February 26, 2009 11:57:00 AM

    Maybulk share price is in short-term uptrend. I would wait&see whether the price can break through the downtrendline resistance. If cannot then only sell, if broken & supported, then HOLD. I think that its RM0.30 dividend can refrain some selling pressure for some time.

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  2. herbertThursday, February 26, 2009 2:25:00 PM

    Hi Alex, i was bought Supermax based on you earlier call. but now u said avoid.. what the sad man..

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  3. Alex LuThursday, February 26, 2009 2:28:00 PM

    Hi JunK,

    I think the good level to take profit on Maybulk is RM3.00-3.20. Good luck.

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  4. Alex LuThursday, February 26, 2009 2:39:00 PM

    Hi Herbert,

    Supermx has tested its low of RM0.80 & rebounded from it. You can hold onto this stock for now. Its resistance will be at RM0.90 & RM1.00.

    I said I would ignore this stock since the management's public statement has been misleading or inaccurate. If you have read their statement on January 9, you would have thought there would be no further losses from their APLI investment, as it was fully provided for. Then, they sprung the surprise on you in their 4Q2008 results. That's bad. If we can't rely on the company's statement, then it is best that we get out of that investment.

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  5. aLanThursday, February 26, 2009 3:01:00 PM

    Hi Alex,

    Actually my target price is 2.94-2.98. I don't mind giving up the dividend.

    Thanks for your reply.

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  6. UnknownTuesday, May 11, 2010 10:20:00 PM

    Maybulk, what you think about today close RM 2.96, is time to buy?

    ReplyDelete