KFima- top-line & bottom-line lifted by strong plantation division

Results Update

For QE30/6/2011, KFima's net profit increased by 30% q-o-q or 40% y-o-y to RM24 million while its turnover increased by 25% q-o-q or 15% y-o-y to RM128 million. The improvement was attributed to better performance from the plantation division.


Table: KFima's last 8 quarterly results



Chart 1: KFima's last 24quarterly results

Valuation

KFima (closed at RM1.68 yesterday) is now trading at a PE of 5.4 times (based on te last 4 quarters' EPS of 31 sen). This is an undemanding PE multiple. Like TWSPlnt, the question to ask is whether KFima can maintain its earning at this level. The market is apparently reluctant to price the stock higher than this PE multiple, possibly fearing a drop in CPO prices which may pull down KFima's earning.

Technical Outlook

From the daily chart (Chart 2), we can see that KFima is trading within a range between Rm1.50 & RM1.95. A breakout of this range will point the way forward for the stock. From the monthly chart (Chart 3), we can see that KFima;s immediate resistance is at RM2.00 & then at RM2.20. Its immeidate support is at the 10-week SMA line at RM1.62. A break below RM1.62 could signal the end of its 2 & 1/2 years' uptrend line.


Chart 2: KFima's daily chart as at August 18, 2011 (Source: Tradesignum)



Chart 3: KFimas monthly chart as at August 1, 2011_plotted on log scale (Source: Tradesignum)

Conclusion

Based on good financial performance, attractive valuation and still positive technical outlook, I would rate KFima a HOLD. However, its share price & financial performance is dependent on the performance of CPO prices. As such, it is important that we keep ourselves abreast with the movement of CPO prices.