Faber has just announced its results for QE28/2/2010 and it is a HUGE DISAPPOINTMENT! Even though, the results was an improvement over the results of the previous corresponding quarter, it was substantially lower than the immediate preceding quarter, with net profit lower by 66% to RM14.4 million & turnover lower by 39%.
Table 1: Faber's last 10 quarterly results
Now, we learned that the big jump in the immediate preceding quarter, QE30/11/2009 was attributable to the higher revenue from Integrated Facilities Management ('IFM') Concession which was mainly due to one-off revenue received from hospital for the claim for linen loss. In addition, it has completed a IFM maintenance contract secured earlier (see Table 2 for Note 20). In the absence of these two factors, Faber's top-line & bottom-line dropped in QE28/2/2010. None of these exceptional items were explained in the Notes accompanying the results for QE30/11/2009 (see Table 3 for Note 21). In fact, if one were to read Note 22 for QE30/11/2009, you would get a very bullish impression of the future prospect of Faber because the note insinuated the improvement was sustainable due to higher revenue from the new business in UAE & higher bed occupancy plus additional new facilities in government's hospital (see Table 3 for Note 22).
Incomplete disclosure of this nature reflects badly on the professionalism of Faber's management.
Table 2: Faber's q-o-q changes for QE28/2/2010 explained
Table 3: Faber's q-o-q changes for QE30/11/2009 "explained"
Table 4: Faber's q-o-q changes for QE30/11/2009- further explanation?
Chart 1: Faber's 13 quarterly results
Valuation
Assuming that Faber's results for QE28/2/2010 can be maintained for the next 3 quarters, its full-year EPS would be about 16 sen. Based on its closing price of RM2.26 yesterday, Faber is trading at a forward PER of 14 times. The stock is fully valued. Faber should trade at a PER of no more than 13 times, a discount of at least 15% to market- due to its poor professionalism.
Technical Outlook
The stock may find support at the 10-week or 20-week SMA lines at RM2.18 or RM1.97. If these support failed, it could test the strong horizontal support at RM1.75.
Chart 2: Faber's weekly chart as at May 5, 2010 (Source: Quickcharts)
Conclusion
Based on the above, Faber is rated a SELL on strength.
was mainly due to one-off revenue received from hospital for the claim for linen loss.WHAT??..NOW only they explained..
ReplyDeletehello alex,
ReplyDeleteis EPMB a good buy at current level for medium term?.it is moving sideway & inching higher. their quarterly results are better & perodua sales are in increasing which must be the catalyst boosting their revenue. but thier liabilites are quite high.do you think the stock is fully valued or still have room for upside?
Hi ks,
ReplyDeleteEPMB's performance has improved steadily over the past 4 quarters.
For QE31/3/2010, it reported a net profit of RM4.1 million on turnover of RM150 million. Based on this, EPMB's annualized EPS is about 10 sen. At RM0.51, EPMB is attractively priced at PER of 5 times.
However, you have noted EPMB's less than satisfactory financial position. Its current ratio is bad at 0.6 times while its gearing ratio is high at 0.9 times. The poor financial position would be an issue when the economy & the demand for automobile & parts slow down.
Technically speaking, EPMB is likely to hold at RM0.45-50. The stock has broken above its downtrend line at RM0.44-45 in September last year. Its 40-week SMA line support is at RM0.45.
I think the prev quarter non-disclosure of the reason for the good showing was deliberate... after all, PLCs are pressured to show a good picture to keep the share price healthy...
ReplyDeleteThey would not want to disclose ever, if not for the drop in earnings in the current quarter. Too bad, they now have to spill the beans becuz they want the investors to think that they have done ok for the current quarter..
If the numbers are large enough, Bursa should take a look and ask some pertinent questions..
Hi Alex,
ReplyDeleteHow to get those financial reports just like you publishing at the blogs,while i look for the star news but it's not the latest financial report.
Thks
ken
Hi dipankara,
ReplyDeleteMost newspapers report only the y-o-y changes. For investment purposes, you need to look at q-o-q changes. By doing so, you would notice the incremental changes which may justify a bullish or bearish outlook for a stock. However, you must be sure that the change is not due to seasonal factor.
Hi Alex,
ReplyDeleteThanks for educated,where did i get those financial report of q o q.would i need to buy?
ken
Dear Alex,
ReplyDeleteKMN tried to buy back their own shares to slow down the sell down yesterday, However, we must be careful that EPF may further unload their huge chunk of KMN shares anytime, resulting in panic selling.
Thanks.
Dear Alex,
ReplyDeleteOn Faber, I fully agree with your views that it may test its strong horizontal resistance @ 1.75 soon.
So we must be prepared for it!
On professionalism, but how many companies in Malaysia do possess the required undisputed standard ?
So we must be very cautious when trading on shares from GLC and political-linked companies such as Faber, there are many more to be exposed but they are very sensitive !
KMN is of another group of companies whose CEO are very active in MBO and company buy-back games.
Thank you again for your info.
Hi dipankara,
ReplyDeleteIf your current broker has a tie-up with KLSE Tracker or Equities Tracker, you can access their research & get 5 quarterly results, i.e. the latest 5 quarterly results. If you are a client of Kenanga, you can access this via our internet portal, Kenwealth.
Hi kyong,
ReplyDeleteYour point on KNM noted. The horizontal support at RM0.50 seems to be holding- even in this trying time. However, if this line is violated, the stock may drop to the next strong horizontal support at RM0.40. At this moment, the probability of this scenario panning out is low. I think the RM0.50 could be the base for this stock.
This comment has been removed by a blog administrator.
ReplyDeleteHi Alex
ReplyDeletecan I have your FA view on AMDB?
thank you very much
Hi edge2002,
ReplyDeleteAMDB is a profitable property developer. For 9-month ended 31/12/2009, it reported a net profit of RM24.7 million on turnover of RM191 million. Annualized EPS for FY2010 is about 4.4 sen. At the current price of RM0.42, the stock is trading at a PER of 9.5 times.
Financial position is acceptable, with current ratio at 1.7 times & gearing ratio at 0.6 times.
Chartwise, AMDB may have broken above its long-term downtrend line at RM0.40. A short-term uptrend may have just started, with support at RM0.41-42.
Hi Alex,
ReplyDeleteIs CSC Steel a good buy since the fundamental of this Co is strong with improvement in world's steel prices? Revenue for this quarter increased few folds and it has a strong balance sheet with strong cash flow and little borrowing to show. Will the share price change drastically after the ex dividend on 30/6/10? Its just too attrative to go for this investment since dividend declared is $0.20/share. Do you think so? Thanks..