UOADEV reported its results for QE31/12/2011on February 27. Its net profit increased by 107% q-o-q or 22% y-o-y to RM8.4 million while its pre-tax profit dropped 15% q-o-q or 32% y-o-y to RM6.6 million. This group enjoys lower effective tax rates due to higher profit contribution from a foreign subsidiary which enjoyed from tax-free benefits. Revenue declined 3% q-o-q but rose 14% y-o-y to RM144 million.
Table: Tongher's last 8 quarterly results
Chart 1: Tongher's last 29 quarterly results
Financial Position
Tongher is in a healthy financial position as at 31/12/2011, with current ratio at 2.48 times and gearing ratio at 0.31 time.
Valuation
Tongher (closed at RM2.39 yesterday) is now trading at a PE of 8.2 times (based on last 4 quarters' EPS of 29 sen). At this PE multiple, Tongher is deemed fairly valued.
(Note: The company has proposed a 1st & final dividend of 22 sen for FY2011. The entitlement date for this dividend has not been fixed yet.)
Technical Outlook
From the weekly chart below, we can see that Tongher appears to have broken above its intermediate downtrend line at RM2.20 in February. However, it has yet to break above its long-term downtrend line at RM2.45-2.50 (see the monthly chart). A breakout of this downtrend line could be the start of Tongher's long-awaited upleg.
Chart 2: Tongher's weekly chart as at April 17, 2012 (Source: quickcharts)
Chart 3: Tongher's monthly chart as at April 17, 2012 (Source: Tradesignum)
Conclusion
Based on improving financial performance, healthy financial position, reasonable valuation & nice technical set-up, Tongher could be a good stock for long-term investment. You may buy on weakness if the stock drift back towards the RM2.00 level or on breakout above the RM2.50 level.
Hi Alex
ReplyDeleteAny comment on Ptaras?
dear alex,
ReplyDeletecanone has fared better than kianjoo in the first quarter. the outlook for kianjoo is really long term, and eat dividend. what do u advice on kianjoo for now
Hi cheer
ReplyDeletePtaras is still in an upward channel, with support at RM2.20 & resistance at RM3.10. Please check on the fundamentals by visiting Bursa website.
Hi b
ReplyDeleteCanone is likely to rie further since it broke above the psychological RM2.00 mark.
Kianjoo is now resting on a more gradual uptrend line, with support at RM1.95. If that support is violated, it may find support at RM1.85 & then at RM1.70. Kianjoo's recent results has been a bit disappointing. In addition, some funds may decide to exit the stock since the management is likely to change with Canone coming in as the substantial shareholder in place of the See family. At the present price level, I think Kianjoo is a HOLD but you may want to reduce your position if it inched up to RM2.15-2.20.