TGuan: Earning rebounded

Results Update

For QE30/6/2015, TGuan's net profit increased by 53% q-o-q but declined by 12% y-o-y to RM7.1 million while turnover increased by 7% q-o-q but dropped by 12% y-o-y to RM173 million. The sequential increase in revenue was mainly due to increase in export volume and higher selling prices brought on by higher average prices of raw materials. The sequential increase in profits was mainly due to the higher contribution from PVC food wrap division.


Table: TGuan's last 8 quarterly results


Chart 1: TGuan's last 41 quarterly results

Valuation

TGuan (closed at RM1.75 yesterday) is now trading at a PE of 15 times (based on last 4 quarters' EPS of 12 sen). At this PER, TGuan is deemed fully valued attractive. However, if TGuan can sustain last 2 quarters' EPS, its full-year EPS could rebound back to 22 sen. At this annualized earning, TGuan's PER would be an attractive 8 times.

Technical Outlook

TGuan is in a long-term uptrend line, SS which accelerated in 2013-2014. The accelerated uptrend could not sustain and the share price has since dropped back to the long-term uptrend line, SS with support at RM1.65-1.70.


Chart 2: TGuan's daily chart as at Aug 19, 2015 (Source: ShareInvestor.com)

Conclusion

Based on improved financial performance, fair valuation & still positive technical outlook, TGuan 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, TGuan.