Thursday, December 05, 2013

Latitud- deja vu again?

Results Update

For QE30/9/2013, Latitud's net profit rose 145% q-o-q or 62% y-o-y to RM14.6 million while revenue rose 42% q-o-q or 27% y-o-y to RM177 million. Top-line grew because of increase capacity for the Vietnamese plant of about USD1 mil per month; more order received; and, higher USD exchange rate. Bottom-line improved due to better gross profit margin coupled with the decrease in finance costs and increase in unrealized forex gain (with USD strengthening against MYR).

The improved performance is due substantially to the strong recovery in the US housing market. I have mentioned this before as Latitud exports a significant portion of its output to the US (here).

Table 1: Latitud's last 8 quarterly results

Chart 1: Latitud's last 33 quarterly results 


Latitud (closed at RM1.74 yesterday) is now trading at a PE of 4.5 times (based on last 4 quarters' EPS of 30.8 sen). At this PE, Latitud is deemed fairly attractive.

Technical Outlook

Latitud had a sharp rally to test its February-March 2010 high of RM1.75. A break above this level would be a positive for the stock but chances are good that the first attempt would not succeed. If we look back into its earning record, we would see that at end of February 2010, Latitud reported a second outstanding quarterly net profit in QE31/12/2009. The EPS of 17 sen for that quarter equaled the EPS for QE30/9/2009. In fact, Latitud's EPS for the 4-quarter ended 31/12/2009 was 49 sen! I wonder whether we are witnessing a repeat of another too-good-to-be-true quarterly earning. (Note: This is the reason why I hesitated posting on this stock for one week!)

Chart 2: Latitud's weekly chart as at Dec 4, 2013  (Source: Interachart)


Based on better financial performance & attractive valuation, Latitud is a good stock for long-term investment. However, we should be a bit careful as the stock had a sharp run-up and is now pressing against its 2010 high. I believe this could be a trading SELL opportunity.

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, Latitud.


Admin said...

thanks for sharing.

Jim said...

Hi Alex,

Can you comment on JAKS?
Good for med-long term investment?


lai said...

Hi Alex,

I was thinking maybe, just maybe, with the uptick of palm oil prices, what are the chances for stocks like say... Rimbunan Sawit?


Alex Lu said...

Hi Jim

JAKS may have broken above its long-term downtrend line at RM0.45 in May-June this year. Its immediate support is the horizontal line at RM0.50 & next resistance is the horizontal lien at RM0.60.

Alex Lu said...

Hi lai

Rimbunan Sawit had a big rally in November 2011 to February 2012. It rose from 50 sen to RM1.20. Its immediate support is at the horizontal lines at RM0.80 and, below that, at RM0.70. Its intermediate downtrend line resistance is at RM0.85-0.90. Its long-term uptrend line support is at RM0.65.

If you want to trade this stock, you can try if it breaks above RM0.90. Alternatively, you wait for a drop to RM0.70.