NCB- mixed results for QE31/3/2013

Result Update
For QE31/3/2013, NCB's net profit increased 49% q-o-q but dropped 29% y-o-y to RM35 million while revenue declined by 2% q-o-q or 5% y-o-y to RM231 million. Lower revenue is attributable to lower container throughput handled by Northport. The bottom-line rebounded q-o-q due to increase in certain expenses incurred in QE31/12/2012. When compared to the same quarter last year, bottom-line dropped due to increase in the cost of servicing new businesses in the logistics division.


Table: NCB's last 8 quarterly results


Chart 1: NCBs last 20 quarterly results

Dividend Payout

Investors have been rewarded by bumper dividend over the past 5 years. The last two big payouts were:

• 56 sen in QE31/3/2012 when its bank balances stood at RM674 million; and
• 59 sen in QE31/3/2011 when its bank balances stood at RM896 million

In the past 2 quarters, NCB did not announce a big payout. Is it be due to the 'small' cash pile of RM276 million? Even a special dividend of 30 sen would entail a payout of RM235 million and I doubt NCB would want to reduce its bank balances below RM100 million.  So, the days of bumper dividend payout is over.


Chart 2: NCB's Dividend Payout over past 5 years

Valuation

NCB (at RM4.60 as at 11.00am) is now trading at a PE of 14.6 times (based on last 4 quarters' EPS of 31.5 sen). At this PE, NCB is still reasonably valued, though the upside is limited.

Technical Outlook

NCB is still in an uptrend. If we use the 100-day SMA line as the proxy for the uptrend line, then the support for the stock is at RM4.48-4.50.


Chart 3: NCB's daily chart as at Apr 25, 2013_11.00am (Source: quickcharts)

Conclusion

Despite the decline in its financial performance over the past few quarters and the low prospect of big dividend payout, NCB is still a reasonably valued stock involved in a stable industry. Its technical outlook is still positive and on that basis, I would rate the stock a HOLD.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, NCB.