JTInter- bottom-line rebounded

Result Update

For QE31/3/2013, JTinter's net profit rebounded to RM40 million from RM3 million in QE31/12/2012 or RM38 in QE31/3/2012. Revenue was mixed- up 7% q-o-q but down 4% y-o-y to RM310 million. JTInter's revenues increased q-o-q due to higher sales volume. Bottom-line improved q-o-q, driven by higher sales volume, lower marketing investments and lower operating expenditures in the current quarter. In addition, there was a one-time restructuring impact of the Group leaf and stemmery operations amounting to RM12.2 million in the preceding quarter.



 Table: JTInter's last 8 quarterly results

 
 Chart 1: JTInter's last 24 quarterly results

Valuation

JTInter (closed at RM6.80 yesterday) is now trading at a PE of 15.5 times (based on last 4 quarters' EPS of 44 sen, after adjusting for the one-time restructuring expenses of RM12.2 million incurred in QE31/12/2012). For a 'consumer' stock, JTInter is deemed fairly valued. It paid dividend of 41 sen in FY2012 & 54 sen in FY2011. Based on last FY dividend payout, its dividend yield is at a respectable 6%.

Technical outlook

 JTInter is still in an uptrend line. Its upside is capped at RM6.80-7.00. Until it can break above that level, JTInter is expected to swing between the uptrend line (at RM6.20) and the RM7.00 mark.


Chart 2: JTInter's weekly chart as at May 22, 2013_11.00am (Source: Quickcharts)

Conclusion

Based on improved financial performance, reasonable valuation & positive technical outlook, I would revise JTInter's rating from SELL INTO STRENGTH to 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, JTInter.