For QE31/3/2015, Hevea's net profit increased by 57% q-o-q or 75% y-o-y to RM14 million while revenue increased 1% q-o-q or 11% y-o-y to RM116 million.
Revenue increased y-o-y due to increased revenue from the particleboard sector, due to higher volume and higher average selling price as a result of sales of higher grade, value added products and strengthening of USD.
Profit before taxation increased y-o-y due to the improved performance in the particleboard sector, despite being impacted by unrealised exchange loss of RM2.97 million from the translation of the USD denominated term loan.
Table: Hevea's last 8 quarterly results
Chart 1: Hevea's last 30 quarterly results
Valuation
Hevea (closed at RM3.08 in the morning session) is now trading at a PE of 8.1 times (based on last 4 quarters' EPS of 38 sen. At this PE multiple, Hevea is deemed fairly attractive.
Technical Outlook
Hevea has been on an uptrend since it broke above the horizontal line at RM0.85 in 2013. In early January this year, the stock broke into a new high- above RM2.00.I believe that the target price for the current rally is likely to be RM3.50.
Chart 2: Hevea's weekly chart as at May 25, 2015_12.30pm (Source: ShareInvestor)
Conclusion
Based on improved financial performance, attractive valuation & positive technical outlook, Hevea remains 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, Hevea.
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