DLady- still an attractive consumer stock

Results Update

For QE30/6/2011, DLady's net profit dropped 2% q-o-q to RM27.8 million on the back of a 2%-increase in turnover. When compared to the same quarter last year, its net profit increased by 47% while turnover increased by 8%. Its y-o-y improvement in turnover was due to higher demand for liquid milk, while pre-tax profit increased due to higher sales & favorable sales mix.


Table: DLady's last 8 quarterly results



Chart 1: DLady's last 13 quarterly results

Valuation

DLady (closed at RM18.24 yesterday) is now trading at a PE of 14.6 times (based on last 4 quarters' EPS of 125 sen). I believe DLady can command a PE multiple of 17-18 times. At 17 times, DLady is valued at RM21.25.

Technical Outlook

DLady seems to be trapped within a giant rising wedge formation, with support at RM13.00 & resistance at RM25.00. However, DLady's immediate resistance is the horizontal line of RM20.00, which is its all-time high price.


Chart 2: DLady monthly chart as at August 1, 2011_plotted on log scale (Source: Tradesignum)

Conclusion

Based on good financial performance, possible room for higher valuation & still positive technical outlook, I would rate DLady a HOLD.