F&N has just announced its results for QE31/12/2009. Its net profit increased by 27.3% q-o-q or 52.6% y-o-y to RM77.7 million while turnover increased by 9.2 % q-o-q or 8.1% y-o-y to RM992 million. The improved performance was attributable to 12% y-o-y growth in sales of the Soft Drinks division and 8% y-o-y growth in the Dairies division. F&N's latest results shows that its growth trend has not hit a plateau, contrary to my concern in the last post (here).
Table 1: F&N's 8 quarterly results
Chart 1: F&N's 13 quarterly results
Despite the recent increase in the cost of raw material (such as milk powder, sugar & aluminium), F&N is cautiously optimistic that the year;s performance.
Valuation
Assuming that F&N can maintain its latest quarterly performance for the next few quarters, then it may achieve a full-year EPS of 87 sen. F&N (closed at RM10.50 yesterday) would then be trading at a PER of 12 times. For a multinational company involved in consumer stable product, F&N may command a PER of 15 times. Thus, its fair value should be closer to RM13.00.
Technical Outlook
As noted before, F&N is in an uptrend line, with support at RM9.00. It should have very good support at the psychological RM10.00 level, which is also the 50-week SMA line.
Chart 2: F&N's weekly chart as at Feb 10, 2010_12.30pm (Source: Quickcharts)
Conclusion
Based on good financial performance, attractive valuation & positive technical outlook, F&N is a good stock for long-term investment.
Hi Alex,
ReplyDeleteMAS dropped so much recently. It reach 2.04 now. Base on OSK research, MAS will drop to 2.00. DO you think it will drop further or stay at 2.00 ?
Rgds,
KH CHAN
Hi David,
ReplyDeleteA reader asked me about MAS earlier today. I will give you the same reply:
"Since MAS is now dropping to its strong horizontal support of RM1.90-2.00, it does not make sense to sell it. It may make more sense to buy at RM1.90-2.00 & then wait for a rebound.
In technical analysis, one buys at the support but sells if the stock had broken below the support. Alternatively, one sells at a resistance or buys if the stock had broken above the resistance."
Hi Alex,
ReplyDeleteMAS right issue is at 1.60. Maybe i will wait it drop to 1.60 and buy. What do you think ?
Rgds,
David
Hi David,
ReplyDeleteMAS's immediate horizontal support is at RM1.90-2.00. MAS-OR, which is currently trading at RM0.15, may offer investors an opportunity to get into MAS at RM1.75 (by buying MAS-OR at RM0.15 & subscribing for the Rights Issue at RM1.60).
I don't think MAS will drop to RM1.60 as it is likely to enjoy support by some local funds. If it does happen, the acceptance of the Rights Issue would be affected.