LTKM- an attractive poutry stock

Results update

For QE31/12/2013, LTKM's net profit rose 11% q-o-q or 188% y-o-y to RM5.7 million on the back of higher revenue (which rose 11% q-o-q or 16% y-o-y to RM47 million). The increase in net profit was in tandem with the higher revenue resulting from higher sales and improved selling prices.


Table 1: LTKM's 8 quarterly result

LTKM's top-line has been on an uptrend for more than 5 years. Its PBT looks set to touch the RM10 million a quarter. The improvement on bottom-line in the past 2 years is attributable to higher revenue & improvement in profit margin. One reason for the improved margin is lower price of raw material, such as corn (see Chart 2 below). I believe LTKM will soon increase its dividend payout in line with higher profit.


Chart 1: LTKM's 28 quarterly results
 

Chart 2: Corn's monthly chart as at Jan 31, 2014 (Source: futures.tradingcharts.com)


Valuation

LTKM (closed at RM2.88 yesterday) is now trading at a PE of 5.5 times (based on last 4 quarters' EPS of 52 sen). At this multiple, LTKM is deemed attractive.

Technical Outlook

LTKM broke above its descending triangle in mid-2013 and rallied all the way to RM3.00. After this strong rally, the stock is likely to consolidate its gain before another big move.


Chart 3: LTKM's weekly chart as at Feb 25, 2014 (Source: Tradesignum)

Conclusion

Based on attractive valuation & goof financial performance, LTKM could be a good stock for long-term investment.

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, LTKM.