MFlour has just announced its results for QE31/3/2012. It incurred a net loss of RM598k as compared to a net profit of RM20.4 million for QE31/12/2011 or RM29.8 million for QE31/3/2011. Its revenue dropped due to lower feed sales & lower prices for all products while its bottom-line dropped due to lower margin for poultry integration as well as feeds & trading in fee ingredients.
Table: MFlour's last 8 quarterly results
Chart 1: MFlour's last 25 quarterly results
Valuation
MFlour (closed at RM1.59 yesterday) is now trading at a trailing PE of 6.9 times (based on last 74 quarters' EPS of 23 sen). I did not compute its forward PE because we cannot be sure how the company will fare in the next quarter.
Technical Outlook
MFlour is still in an uptrend line. However, it has just violated its 10-month SMA line. The last 2 occasions when it did that (in 2000 & 2008), the stock continue to slide. In 2000, the stock entered into a long bear market while in 2008, it dropped to the 50-month EMA line. How low will it go this time?
Chart 2: MFlour's monthly chart as at May 17, 2012 (Source: Tradesignum)
Conclusion
Based on the above, MFlour is rated a SELL.
Hi Alex
ReplyDeleteJust for the purpose of discussion. MFLOUR has had so many corporate exercise which adjusted its share price in 2011 into negatives.
Would you agree that only chart from Apr'11 onwards matters as anything before that is negative. You can't use fibonacci to connect the low prior to Apr'11.
In other words, Mflour only has approx 52 weeks data hence it would not be meaningful to refer to 2000 or 2008 data? How should we go about reading such chart?
I would not think that MFlour made a loss by having a minus EPS.
ReplyDeleteThe 62 cents special dividend just distributed last month, may have caused this quarter EPS negative.
This happened to Maxis before when it announced a 20 cents special dividend for that quarter.
http://www.investopedia.com/ask/answers/08/dividend-exceed-eps.asp
Hi JY,
ReplyDeleteThe relevant of older data has always been a matter of debate. However, from my observation, the older data still useful. This is especially true when we are dealing with an old company like MFlour.
Hi Jollybee,
ReplyDeleteThe Investopedia article is correct. However, it does not necessarily mean that if you pay out a dividend that is higher than your current year earning, your earning would drop. The only way that a higher dividend may impact earning is when a company borrowed to pay out the dividend and this borrowings resulted in interest expense which reduced the earning.
One of my forumer said, since last quarter MFlour's main customer Gardenia brand may have stopped ordering flour from the company. If this is true, those unsold flour in last quarter should become an inventory for next quarter, and that should not be a big problem since the flour has a big market.
ReplyDeleteOtherwise, why the investor worry that flour market currently saturated in this region? I cannot believe such an established company like MFlour has something technically wrong with their operation. Isn't that all flour mills run with the same pattern?