Daiman- not trying hard enough!

Result Update

For QE30/9/2013, Daiman's net profit increased by 105% q-o-q or 219% y-o-y to RM32.6 million while revenue dropped by 40% q-o-q or 38% y-o-y to RM28 million. The improved performance q-o-q was "due mainly to gain arising from the accounting of the 12.3 acres of land to be jointly developed with Rainbow Crest Sdn Bhd. This has more than covered for the decline in profit from lower sales from the property development business". The amount of the exceptional gain was RM39.5 million. In QE31/3/2013, Daiman also recorded an exceptional gain from sale of investment property of RM28.9 million.

There were occasional reports about how cheap is this stock- including a report in the Edge this week- but all the analysts who tracked this stock would look askance when they see a quarterly result like this. The question in everyone's mind is this: Why is the management of Daiman so easily contented!!! FYI, I posted on its breakout in March (here).


Table: Daiman's last 8 quarterly results


Chart 1: Daiman's last 25 quarterly results

Valuation

Daiman (closed at RMRM3.35 today) is now trading at a PE of 8 times (based on last 4 quarters' EPS of 43 sen). It also traded at a Price to Book of 0.7 time (based on NTA of RM5.06 p.s. as at 30/9/2013). Its dividend yield is a decent 3.6%.

Note: If the exceptional gain totaling RM68.4 million in QE30/9/2013 & QE31/3/2013 are excluded, the net profit for the past 4 quarters would be adjusted to RM22.8 million. Without exceptional gain, Daiman's bottom-line would be much lower going forward. 

Technical Breakout

Daiman broke above the line AB at RM2.15-2.20 in April. Since then, its share price has rallied strongly.


Chart 1: Daiman's weekly chart as at Nov 26, 2013 (Source: Quickcharts)

Conclusion

Based on cheap valuation (Price to Book) and technical breakout, Daiman could continue to rise. However, this stock has been a dull stock for many years and we can only hope that the Johore property play has legs to carry Daiman higher. If the Johore property play comes to a premature end, this stock would come down to earth again.

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, Daiman.