Century: Earnings boosted by Exceptional Gain!

Recent Results

For QE30/6/2015, Century's Net Profit rose 60% q-o-q or 150% y-o-y to RM12 million while revenue increased by 6% q-o-q or 7% y-o-y to RM76 million. The sequential increase in revenue was mainly due to due to the higher activities of the procurement logistics services segment. Profit increased q-o-q partly due to the gain on disposal of a commercial land amounting to RM10.78 million.


Table: Century's last 8 quarters' results


Chart 1: Century's last 37 quarters' results
 
Financial Position

As at 30/6/2015, Century's financial position is deemed satisfactory with current ratio at 2.1 times and gearing ratio at 0.6 time. Its receivable collection period worsened to 156 days from 121 days as at 30/6/2014.
 
Valuation

Century (closed at RM0.83 yesterday) is now trading at a trailing PER of 7.5 times (based on last 4 quarters' EPS of 11 sen). However, this profit includes exceptional gain from disposal of PPE of RM58.9 million & revaluation surplus of RM2.5 million. If these are excluded, Century would be a loss-making company. Thus, there is really no PER to look at. PBR is reasonable at 1.1x (based on NTA of RM0.77 per share as at 30/6/2015) while DY is decent at 5.6%.

Technical Outlook

Century is in a long-term uptrend line, SS with support at RM0.70. Below that, we can expect strong horizontal support at RM0.60. The share price recently plunged when it was reported that Nestle is suing the company for damages totaling RM21 million. No further details were given. For more, go here.


Chart 2: Century's monthly chart as at Aug 17, 2015 (Source: ShareInvestor)

Conclusion

Based on uncertain earning & mixed valuation, Century's rating is revised from Trading BUY to a HOLD. Its mildly positive technical outlook would be duly tested in this uncertain market but, for now, it helps to buffer the negatives for this stock.

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, Century.