F&N's net profit rose further

F&N has announced its results for 3Q2009 ended 30/6/2009. Its net profit increased by 11.0% q-o-q or 49.1% y-o-y to RM59.1 million while turnover increased marginally by 0.8% q-o-q or 4.1% y-o-y to RM921 million. The improved performance was attributable to higher soft drinks sales volume, improved sales mix and increased productivity.


Table: F&N's 8 quarterly results


Chart 1: F&N's 11 quarterly results

F&N (closed at RM9.80 yesterday) is now trading at a trailing PE of 17.5 times (based on last 4 quarters' EPS of 56 sen). For a well-managed multinational company involved in consumer stable products, this PE multiple is considered reasonable. It is possible that F&N may trade up to a PE multiple of 20 times or up to RM11.20 per share.

As noted before, F&N has been rising in a slowly expanding channel. The immediate upper boundary of this channel is about RM11.00 (previously stated as RM10.00 to RM10.40), while the lower boundary is about RM7.60-8.30. This stock has been rising on relatively thin volume for a long time. A sudden increase in buyers or sellers can easily push the price sharply higher or lower. Nevertheless, one may be well-rewarded by staying with the trend, but taking some profit at the upper boundary of the channel and/or buy at its lower boundary.


Chart 2: F&N's monthly chart as at August 6, 2009 (Source: Quickchart)

Based on steady financial performance & continued bullish technical outlook, one should hold onto the stock. Some profit-taking may be advisable if the price rose to the upper boundary of the upward channel and/or buy at its lower boundary.