QL- Top-line & bottom-line improved

Results Update

For QE30/9/2013, QL's net profit increased by 21% q-o-q or 15% y-o-y to RM42 million while revenue increased by 4% q-o-q or 10% y-o-y to RM605 million. The q-o-q increase in top-line was attributable to higher revenue for all 3 segments while higher bottom-line was due mainly to higher pre-tax profit from the Marine Products Manufacturing & Integrated Livestock Farming segments.



Table: QL's segmental performance compared


Table: QL's last 8 quarterly results

Note that the profit margin has started to hook up after a 3-4 year of decline.


Chart 1: QL's last 19 quarterly results

Valuation

QL (closed at RM4.23 last Friday) is now trading at a PE of 25 times (based on last 4 quarters' EPS of 16.9 sen). Based on this PE multiple, QL is deemed overvalued.

Technical Outlook

QL continued its uptrend after it surpassed the resistance at RM3.30. As the stock is trading in all-time high territory, the upside is anyone's guess.


Chart 2: QL's weekly chart as at Nov 23, 2013 (Source: quickcharts)

Conclusion

Based on improved financial performance & bullish technical outlook, QL is a good stock for long-term investment. Its high valuation can be justified by expected improvement in its Palm Oil Activities segment as its estates start to produce FFB or become more productive.

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, QL.