Cepat- next upleg coming

Background

Cepatwawasan Group Bhd ('Cepat') is involved in oil palm cultivation and milling of oil palm products.

Recent Financial Results

For QE30/9/2011, Cepat's net profit dropped 4% q-o-q but rose 50% y-o-y to RM13 million while turnover was similar down marginally on q-o-q but rose 41% y-o-y to RM79 million. The decline on q-o-q basis was due to lower prices for CPO & Palm Kernel by 8% & 26% respectively. FFB output rose by 5%.


Table: Cepat's last 8 quarterly results



Chart 1: Cepat's last 20 quarterly results

Valuation

Cepat (at RM1.17 now) is trading at a PE of 8.6 times (based on adjusted last 4 quraters' EPS of 13.64 sen). At this PE, Cepat is deemed attractive.

Technical Outlook

Cepat broke above its strong horizontal resistance at RM1.04 in January. That coincided with the 1-for-2 bonus issue. After the bonus issue, the stock tried to rise but was capped at RM1.15. This morning, it broke above this resistance of RM1.15. I believe the target price for the next upleg will be RM1.40-1.50.


Chart 2: Cepat's weekly chart as at Feb 20, 2012_9.30am (Source: Quickcharts)

Conclusion

Based on satisfactory financial performance, reasonable valuation & positive technical outlook, Cepat could be a good trading BUy or even a good medium investment stock.