Kianjoo's net profit increased by 30% q-o-q or 40% y-o-y to RM30.7 million for QE31/3/2011. Its turnover increased by 18% y-o-y but dropped 8.6% q-o-q to RM255 million. The drop in turnover on q-o-q basis is probably due to the presence of the CNY break. Despite the lower turnover, net profit improved due to writing down of raw material cost and additional accrual for staff's performance in QE31/12/2010.
Table: Kianjoo's last 8 quarterly results
Chart 1: Kianjoo's last 20 quarterly results
Outstanding Corporate Exercise
Kianjoo has proposed a 1-for-2 bonus issue and a 1-for-4 warrant issue at RM0.01 each (go here). The bonus issue and the near-zero cost warrant issue are freebies that would induce increased demand for the stock. How much of these has been priced in is anybody's guess. My feeling is that it has only been partially priced in.
Valuation
Kianjoo (closed at RM2.11 yesterday) is now trading at a PE of 8.4 times (based on last 4 quarters' EPS of 25.04 sen). At this multiple, Kianjoo is deemed attractive.
Technical Outlook
Kianjoo is in an uptrend line, with support at RM1.90-1.95. However, its immediate support is likely to be the psychological RM2.00 level.
Chart 2: Kianjoo's weekly chart as at May 20, 2011 (Source: Quickcharts)
Conclusion
Based on the improved financial performance, attractive valuation, positive technical outlook and freebies to come, Kianjoo is a good stock for both medium to long-term investment.
1 comment:
Alex, for kianjoo-->net profit improved due to writing down of raw material cost
May I know what material cost that they reduce? As tin price is going up.Can you enlighten me?
Thanks
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