Ogawa World Bhd ('Ogawa') is involved in designing, marketing, retailing, distributing, and servicing of health care equipment and supplementary appliances. It provides a range of health and wellness equipment comprising various relaxation, therapeutic, fitness, diagnostic, and hygiene products. For more on the products offered, go to here.
In the past few years, Ogawa has been trying to grow its export markets. From the table below, we can see that FY2013 maybe a breakthrough year for Ogawa as revenue from the export market grew by 45%. It now accounts for 39% of total revenue as compared to 33% in FY2011.
Table: Ogawa's domestic & export segment
Recent Financial Results
For QE30/6/2013, Ogawa's net profit increased by 227% q-o-q or 156% y-o-y to RM9.6 million, while turnover increased by 43% q-o-q or 33% y-o-y to RM78 million. The improved performance was attributable to higher sales & higher gross profit margin.
Table: Ogawa's last 8 quarterly results
However, we must take note that the 4th quarter is always the best quarter in Ogawa's short track record of operating for the past 5 years. So, we must be careful not to be too bullish about Ogawa's performance based on this one quarter.
Chart 1: Ogawa's last 20 quarterly results
Valuation
Ogawa (closed at RM0.865 at the end of the morning session) is now trading at a trailing PER of 7 times (based on last 4 qaurters' EPS of 12 sen). At this multiple, Ogawa is deemed fairly valued.
Technical Outlook
Ogawa has broken above its strong horizontal line at RM0.55 on August 19. This morning, it broke above another strong horizontal resistance of RM0.80. It may even test its all-time high at RM0.95. However, we must consider whether the investors are overreacting to the good news which comes around once every four quarters or the stock has finally taken off to a new plane.
Chart 2: Ogawa's weekly chart as at Sep 6, 2013_12.30pm (Source: Quickcharts)
Conclusion
Based on improving financial performance, Ogawa is a good stock for long-term investment. However, the stock is now fairly valued after a sharp rally. As such, some profit-taking is advisable as the stock approaches its all-time high.
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, Ogawa.
Hi Alex
ReplyDeleteOff topic abit. What's your take on shipping counters? Baltic Dry Index seems to be making a u-turn and having stopped making lower lows for the past 2 years.
Hi JY,
ReplyDeleteI think we may be seeing a bottom for BDI. There was a breakout of the long-term downtrend line at the 940-950 level. The strong horizontal line at 1170-1180 has checked the recent rally. If the 1170-1180 level is taken out (plus the 1200 level as well), BDI may enter into an uptrend.
Maybulk could be a good stock to ride the uptrend in BDI. I almost threw in MISC but that stock has been taken hostage by Petronas. I don't expect much from MISC until a clearer picture emerged.
Hi Alex,
ReplyDeleteBelow is the statement extracted from annual report of MNRB pg.208:
The Company did not elect for the irrevocable option to disregard the Section 108 balance. Accordingly, during
the transitional period, the Company may utilise the credits in the Section 108 balance as at 31 December 2007 to
distribute cash dividend payments to ordinary shareholders as defined under the Finance Act 2007. The Company also
has tax exempt income available for distribution of approximately RM60,251,000 (2012: RM60,588,000) as at 31 March
2013. As at 31 March 2013, the Company has tax credits in the Section 108 balance amounting to RM148,175,000,
which are sufficient to pay franked dividends out of its entire retained earnings.
I would like to know what are the options available for MNRB after the transition expired?