Luxchem: Bottom-line jumped

Background

Luxchem Corporation Bhd ('Luxchem') is a supplier of industrial chemicals whose principal business activities incorporate the following: -

•	marketing and distribution of industrial chemicals and materials; and
•	manufacture of UPRs (unsaturated polyester resins).

Recent Financial Results

For QE30/6/2015, Luxchem's net profit increased by 532% q-o-q or 107% y-o-y to RM9.8 million while revenue was mixed- down 7% q-o-q but up 5% y-o-y to RM161 million. Revenue dropped q-o-q mainly due to lower revenue from trading segments. PBT increased q-o-q as PBT in the previous quarter was depressed by the recognition of Share Option Expenses of RM8.48 million in the Profit or Loss.


Table: Luxchem's last 11 quarterly results (Source: ShareInvestor.com)
 
 
Chart 1: Luxchem's last 11 quarterly results (Source: ShareInvestor.com)

Valuation

Luxchem (closed at RM1.03 yesterday) is now trading at a PER of 9.0 times (based on last 4 quarters' EPS of 11.4 sen).  At this PER, Luxchem is deemed fairly attractive. However, if the Share Option Expenses of RM8.48 million charged off in 1Q2015 is excluded, its full-year EPS would jump to 14.8 sen. This would push down its PER to 7 times. At this adjusted PER, Luxchem looks very attractive.

Technical Outlook

Luxchem is in an uptrend, with support at the 30-week EMA line at RM1.00-1.02.

Chart 2: Luxchem's weekly chart as at July 30, 2015 (Source: ShareInvestor)

 
Chart 3: Luxchem's monthly chart as at July 30, 2015 (Source: ShareInvestor)

Conclusion

Based on good financial performance, attractive valuation and positive technical outlook, Luxchem could be a good stock for a 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, Luxchem.