For QE31/3/2015, KKB's net profit increased by 220% q-o-q or 602% y-o-y to RM26.7 million while revenue rose 16% q-o-q or 80% y-o-y to RM75.7 million. The overall improved revenue and operating results was mainly driven by the Group’s Steel Pipe manufacturing business and Steel Fabrication division.
The Steel Fabrication division recorded a revenue of RM10.4
million (4Q15: RM5.9 million, 1Q14: RM19.5 million) which were derived
from the additional, balance on-going projects involving the fabrication of structural
steel works for Petronas LNG Train 9 Project, the fabrication of steel frame works
for CMS Clinker Plant, the supply of Low/High Tension Steel Poles and
subcontract works for the fabrication of platforms.
The Steel Pipes manufacturing business under the
two subsidiary companies, recorded an aggregate revenue of RM62.3 million (4Q15:
RM55.6 million, 1Q14: RM16.5 million). The increased revenue is
attributed from the on-going supply of Polyurethane Lined Mild Steel Pipes and
other short notice pipe supplies.
Table 1: KKB's last 8 quarterly results
Chart 1: KKB's 31 quarterly results
Valuation
KKB (closed at RM1.64 yesterday) is trading at a trailing PE of 9.6 times (based on last 4 quarters' EPS of 17 sen). At this multiple, KKB is reasonably valued. It can command a PE of 12 times.
Technical Outlook
KKBhas rebounded off the lower line of an expanding triangle- a fairly irregular price formation. It is possible, though not probable, that KKB may go to test the upper line of the triangle (at RM3.00).
Chart 2: KKB's weekly chart as at April 27, 2015 (Source: ShareInvestor.com)
Conclusion
Based on improved financial performance, fairly attractive valuation & mildly positive technical outlook, KKB could be a good stock to consider for 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, KKB
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