VS: Profits bummed up by forex gain

Result Update

For QE31/7/2015, VS's net profit increased by 99% q-o-q or 45% y-o-y to RM53 million while revenue was mixed; rose 21% q-o-q or declined 5% y-o-y to RM507 million. VS's PBT rose q-o-q due to forex gain of RM24.4 million which was partially offset by inventory write-down of RM7.7 million, impairment loss for PPE & trade receivables totaling RM3.0 million & loss on disposal of PPE of RM1.0 million.


Table 2: VS's last 8 quarterly results


Chart 1: VS's last 42 quarterly results

In the past 2 years, VS's net profit has benefited from exceptional gains, such as forex gains (in QE31/7/2015 & QE31/4/2015), tax credit (in QE31/10/2014 & QE31/7/2014) & gain on purchase of a 17.18%-interest in VS International Group Ltd (in QE31/7/2013). If we leave out the exceptional gains, then we can see that the operating performance of VS has been on a steady rise.


Chart 2: VS's last 42Qs NP (as reported & adjusted for exceptional gains)   

Valuation

VS (closed at RM1.47 yesterday) is trading at a trailing PE of 11.5 times (based on last 4 quarters' EPS of 12.8 sen). At this PER, VS (a cyclical stock) is deemed fairly valued.

(Note: VS had a share split of 1-to-5 in September.)

Technical Outlook

Since late 2013, VS has been on a scorching run-up from 25 sen to RM1.50 recently. In the process, VS touched the line connecting the peaks of 2000 & 2007. Naturally, this would present some kind of resistance to the stock. Will it cap the rise for now? We will have to wait & see.


Chart 3: VS's monthly chart as at SEpt 29, 2015 (Source: ShareInvestor.com)

Conclusion

Based on satisfactory financial performance andfair valuation, VS is a good stock for long-term investment. However, I would advise caution as the stock could be trading at peak earning.

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, VS.

Yinson: Seesawing Profits Left Investors Confused

Results Update

For QE31/7/2015, Yinson's net profit increased by 650% q-o-q or 155% y-o-y to RM78 million while revenue was mixed- down 10% q-o-q or 17% y-o-y to RM231 million. Pre-tax profit increased q-o-q due to forex gain of RM55 million & net gain from derivatives of RM18 million.


Table 1: Yinson's last 8 quarterly results


Chart 1: Yinson's last 32 quarterly results 

Yinson's net profit has been seesawing in the past 2 years. If we left out the forex gains, gains on derivatives & gain on bargain purchase (in QE31/7/2015, QE31/1/2015, QE31/10/2014 & QE31/1/2014), a clearer picture will emerge. The picture is one that shows earnings had peaked in QE31/10/2014. This is consistent with the breakdown in crude oil prices in August-September 2014.


 
Chart 1: Yinson's last 32Qs NP (as reported & adjusted for forex, derivatives & exceptional gains)  

Valuation

Yinson (RM2.90 yesterday) is now trading at a trailing PE of 10.4 times (based on last 4 quarters' EPS of 28 sen). However, if we exclude forex gain & derivative gains, the last 4 quarters' EPS would be reduced to. ~8 sen and PER would rise to 35 times. While the earning growth is impressive based on either reported or adjusted net profit, it is doubtful that this trend will continue given the current weak crude oil environment. As such, Yinson is deemed fully valued for now.

Technical Outlook

In the past 1 year, Yinson has transitioned from an uptrend to a sideways movement with a downward bias. Its resistance is at RM3.20 while strong support can be seen at RM2.30.


Chart 3: Yinson's monthly chart as at Sept 29, 2015 (Source: ShareInvestor.com)

Conclusion
 
Based on pedestrian operating financial performance and demanding valuation, I would rate the stock as SELL ON STRENGTH. Aggressive selling is not necessary yet as the technical outlook is still neutral.

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, Yinson.

Scientex: Profits boosted by a substantial fair value gain

Result Update

For QE31/7/2015, Scientx's net profit  increased by 14% q-o-q but remained unchanged y-o-y at  RM49 million while revenue was mixed- dropped marginally by 1% q-o-q but rose 9% y-o-y to RM453 million. Net profit rose mainly due to fair value gain of RM12.6 million arising from the revaluation of investment properties and also better margin contributions from the property and manufacturing divisions.


Table 1: Scientex's last 8 quarterly results


Chart 1: Scientex's last 40 quarterly results

Valuation

Scientex (closed at RM7.08 yesterday) is now trading at a trailing PE of 10 times (based on last 4 quarters' EPS of 70.4 sen). At this PER, Scientex is deemed fairly valued.

Technical Outlook

Scientx is in a long-term uptrend line with support at RM6.00. The stock is likely to move sideways in the next few months. The 20-week EMA line will likely to be the support for the stock at RM6.50.


Chart 2: Scientex's monthly chart as at Sep 29, 2015_12.30pm (Source: ShareInvestor.com)

Conclusion

Based on good financial performance, attractive valuation & positive technical outlook, Scientex remains a good stock for medium to 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, Scientex.

Feeling Bearish? Try FBMKLCI Puts

As at 12:00pm, FBMKLCI was trading at 1598. This means that it is barely hanging onto the psychological 1600 level.If this support is violated, then FBMKLCI may decline to the next support at 1550-1560.


Chart 1: FBMKLCI's daily chart as at Sep 29, 2015_12.00am (Source: ShareInvestor.com)

Despite crawling back some lost ground yesterday, MYR is again weakening. It traded at 4.443 against USD or 3.115 against SGD. If the MYR were to weaken any further, the floodgate will open.

 
Chart 2: USD-MYR & SGD-MYR's daily chart as at Sep 29, 2015_11.00am (Source: XE.com)

In the face of these negative outlook, some may consider buying insurance to protect their portfolio. This insurance comes in the form of put option (or we call them put warrants). If the market drops, your stock portfolio would lose value but the put warrant will rise to reduce the loss. Below is the list of FBMKLCI put warrants for your consideration.

You should aim to buy put warrants with lower premium & longer expiry dates. I have highlighted in bold 4 put warrants that are not too exorbitantly priced. They are FBMKLCI-H1, FBMKLCI-H19, FBMKLCI-H3 and FBMKLCI-HK.


Table: FBMKLCI Put Warrants' Valuation as at Sept 29, 2015 (10.15am)

Just a word of caution for traders. Put warrants - like every other structured warrant - are leveraged instruments. They magnified your gains as well as your losses. Use them carefully! Good luck! 

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, any of the above-mentioned instruments.

Kulim: Something is Cooking

Kulim broke above its 3 years old downtrend line, RR at RM2.85 on September 17. After a short correction, the stock charged through the high of RM2.97 (recorded on September 17 & 18) as well as the RM3.00 mark today.


Chart 2: Kulim's monthly chart as at Sept 28, 2015_3.30pm (Source: ShareInvestor.com)

What's more exciting is the sharp rise of its warrant, Kulim-WC. This warrant, which has only 151 days to expiry, is now trading at a premium of 20%! Not many traders nor investors would pay a stiff premium for a short-dated warrant (or, hold onto such a warrant) in a bearish market unless they have a bullish outlook on the stock. What could make them so bullish?


Chart 2: Kulim-WC's weekly chart as at Sept 28, 2015_3.30pm (Source: ShareInvestor.com)

Based on technical consideration alone, I believe Kulim could be a Trading BUY. I would avoid the warrant due to short tenor, stiff premium and the likelihood of a failing to breakout above the existing downtrend line.As always, please exercise careful discretion in the market...

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, Kulim & Kulim-WC.

SKPRES: Rising in a Vacuum (Updated)

Background

SKP Resources Bhd ('SKPRES') is involved in the manufacture & sales of plastic parts and components, precision and engineering plastic parts. In early 2015, it acquired similar businesses from its sister company, Tecnic Group Bhd.

In the past 6 months, SKPRES had managed to secure 2 significant contracts from one of its big customers, Dyson Ltd. The details of these 2 contracts are as follows:

1) RM2 billion to manufacture new cordless vacuum cleaner spanning five years from October 2015 to September 2020. This translates to an annual revenue of RM400 million.

2) RM3 billion to manufacture new cordless vacuum cleaner spanning five years from January 2016 to December 2021. This translates to an annual revenue of RM600 million.

These contracts would boost SKPRES's revenue for FY16 & FY17 to RM1.3 billion & RM2.3 billion respectively. The company is expected to achieve net profit margin of 7.5% in these 2 years due to enlarged business size and improved efficiency.For more, check out The Edge Daily report.

Historical Results

We can see the gradual improvement in the Top-line & bottom-line for SKPRES for the past 10 years. With the jump in revenue & profits projected for the next 2 years, this uptrend will rise exponentially.


Chart 1: SKPRES's last yearly results plus projection for FY16 & FY17

Recent Financial Results

Its past 140 quarters' results reflects similar impressive growth trend for the company.


Chart 2: SKPRES's last 10 quarterly results

Valuation

SKPRES (closed at RM1.35 last Friday) is now trading at a PER of 25 times (based on last 4 quarters' EPS of 5.3 sen). Based on projected earnings of 10.8 6.8 sen & 19.2 12.0 sen for FY16 & FY17, the high PER will pull back to an attractive 12.5 19.9 times & 7.0 11.2 times, respectively.

(Note: The EPS & PER for FY16 & FY17have been revised.)

Technical Outlook

SKPRES is in an upward channel with support at RM0.85 & resistance at RM1.60.


Chart 3: SKPRES's monthly chart as at Sept 25, 2015 (Source: ShareInvestor.com)

Conclusion

Based on projected sharp rise in earnings & bullish technical outlook, SKPRES could be a good growth stock to consider for investment in the event of price weakness.

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,SKPRES.

Market Outlook as at September 28, 2015

FBMKLCI found support near the psychological 1600 mark, which coincides with the tentative short term uptrend line (S1-S1). The index may stage a rebound with resistance at 1660-1680.


Chart 1: FBMKLCI's daily chart as at Sep 28, 2015_11.00am (Source: ShareInvestor.com)

Meanwhile CPO continued its sharp rise today. It may soon test the horizontal resistance at RM2290-2300.

 
Chart 2: CPO's daily chart as at Sep 28, 2015_11.00am (Source: ifs.marketcenter.com)

WTIC is still consolidating within a descending triangle, ABC with support at resistance at about USD44 & USD47.


Chart 3: WTIC's daily chart as at Sep 25, 2015 (Source: Stockcharts.com)

Despite signs of improvement for crude oil & CPO, investors sentiment will still be negative due to political uncertainties. The weakened MYR will serve as the canary in the coal mine.

Malaysia: Much Loved No More

While we were on festive holiday, the news that Moody's may downgrade Malaysia to junk status quickly reminded us of the rot in our midst: the 1MDB mess and the donation-gate affair. This Moody's story was picked up by the Star newspaper as well as Malaysian Insider. The Malaysian Insider commented:

Two weeks after the Latin American country’s credit rating was lowered, CDS investors are punishing other emerging markets facing similar challenges, sending their implied sovereign ratings at least five levels below their official grades, according to data from Moody’s Corp.
Malaysia is A3 at the company, though traders see it six levels lower at Ba3. South Africa, which is a Baa2, is viewed as a B1 borrower. Three Aa3 nations, including China, are perceived by the markets as deserving the lowest investment grade.
- See more at: http://www.themalaysianinsider.com/malaysia/article/malaysia-deserves-junk-status-like-brazil-says-moodys#sthash.7lrLTR4m.dpuf

Two weeks after the Latin American country’s credit rating was lowered, CDS investors are punishing other emerging markets facing similar challenges, sending their implied sovereign ratings at least five levels below their official grades, according to data from Moody’s Corp. 

Malaysia is A3 at the company, though traders see it six levels lower at Ba3. South Africa, which is a Baa2, is viewed as a B1 borrower. Three Aa3 nations, including China, are perceived by the markets as deserving the lowest investment grade.

The Star highlighted an instagram post by CIMB Group chairman Datuk Seri Nazir Razak (see below).
 

via the Star

The MYR weakened almost immediately. It made a high of 3.1095 against SGD before easing back to 3.0853. Against USD, it made a high of 4.446 before pulling back to 4.380. Chartwise, our USD-MYR & SGD-MYR are on the verge of breaking to the upside of their respective "flag/pennant" formation. If these happen, then USD-MYR & SGD-MYR would continue in the prior uptrend.

 
 Chart: USD-MYR & SGD-MYR's weekly chart as at Sep 24, 2015 (Source: XE.com)

This reminded me of my visit to my mechanic 2 days earlier. I was surprised by his overflowing inventory which exceeded the limited space in his store and was lying everywhere in his workshop. Sensing my curiosity, my mechanic explained that the prices of spare parts have been soaring. To avoid unpleasant surprises and customer's complaints, he resorted to buying ahead. Hence, his overflowing inventory. I quickly reminded him that he should give me the old prices for my new parts.

This episode reinforced a lesson from Economics 101. That's we are on the verge of an inflationary spiral. The first leg of this economic phenomenon is when the traders would buy ahead to secure lower priced goods. In the next stage the traders would wise up and start to hoard these goods in order to secure abnormal profit. When inflation expectation is built into our psychology, all economics players must act to protect themselves. Workers would ask for 2-3 times higher increment in order not to lose out. And, around and around we go. Malaysia will start to lose our competitive edge and our industry will suffer. We are getting ourselves into a slippery slope.

The time has come for Malaysians to bite the bullet. We have 2 stark choices: We can either tackle the 1MDB & Donation-gate mess head-on or implement a stop-gap measure in the form of capital control. Frankly, I don't see why we should go down the road of having capital control again. I also don't see why the whole country has to suffer for the mistake of a few men. I hope that these men - our so-called leaders - will face up to the responsibilities of leadership & the trust that is placed upon them. They must learn 2 important lessons of leadership: taking responsibility for one's action & making personal sacrifices for the good of the nation. I hope that they find the strength to do these quickly.

Selamat Hari Raya Aidiladha

I like to wish all Muslim readers Selamat Hari Raya Aidiladha.


(Source: Happyfathersday2015image)

Teoseng: All the Eggs in One Basket (UPDATED)

Background

Teo Seng Capital Berhad ('Teoseng') is involved in poultry farming, especial egg production, and the trading in chicken feed. Teoseng is 51%-owned by Advantage Valuations Sdn. Bhd. The latter is part of the Leong Hup group of companies that has extensive poultry farming business in Malaysia & Indonesia. Teoseng is one of two companies within the group that are listed on a stock exchange. The other company is PT Malindo which has been listed on the Indonesia Stock Exchange since 2006. For more on the background of the Leong Hup group, go here.

Recent Financial Results

Below are the table & the diagram of Teoseng's P&L for the past 10 quarters. We can see clearly that the company's top-line & bottom-line are in a steady uptrend until last quarter. As noted in the preceding post on LTKM, the prices of eggs have dropped significantly over the past few months. As a result, the company's net profit margin has shrunken to single digit again after 5 quarters of double-digit net profit from QE30/4/2014 to QE30/4/2015.


Table 1: Teoseng's 10 quarterly result


Diagram 1: Teoseng's 10 quarterly result

Valuation

Teoseng (closed at RM1.41 yesterday) is now trading at a PER of 7.5 times (based on last 4 quarters' EPS of 18.7 sen). However, if we annualized the profit (using the 2Q2015 number), the PER for Teoseng is 14 times. At this PER, the stock is deemed fully valued.

Notable Changes in Shareholding

We can see that one of the major shareholders, Nam Yok San has been disposing off some of his shares in the company (here, here & here). In total, he has disposed off 646000 shares in August & July. Valuation could be one of the possible reasons for selling. We cannot be sure of the real reason behind it.

Technical Outlook

Teoseng is in an intermediate downtrend line, with resistance at RM1.50. Support is at the horizontal lines at RM1.20 or RM1.10.


Chart 2: Teoseng's weekly chart as at Sept 22, 2015 (Source: ShareInvestor.com)

Conclusion

Based on poorer financial performance & mildly bearish technical outlook, Teoseng is rated as a SELL INTO STRENGTH at RM1.40-1.50.

Due to availability of new information, the recommendation in this post has been revised to BUY ON WEAKNESS. For more, go here.

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, Teoseng.

LTKM: Egg-citing Times No More (UPDATED)

Results Update

LTKM announced its results for QE30/6/2015 on August 27. Its net profit dropped 90% q-o-q or 66% y-o-y to RM2.5 million while revenue was down 18% q-o-q or 10% y-o-y to RM41 million. Net profit declined sharply q-o-q due to the fall in egg prices & the absence of a RM11.73 million gain arising from revaluation of investment properties recognized in QE31/3/2015.


Table 1: LTKM's 8 quarterly result

Chart 1 shows the movement of broiler price & egg price for 15 years while Chart 2 shows the movement of the main chicken feeds (soyabean meal & corn) for 10 years. The movement of selling prices is fairly consistent with the movement of the raw material costs.

Despite the different time period, the absence of grid on the charts & line chart shortcoming, we can clearly see that there was one period of about 3 years where egg prices were rising while the cost of feed were dropping. This gave rise to abnormally high profit for the poultry players such as LTKM. This abnormal situation could have induced the same players to expand aggressively and this leads to a correction in the prices of egg. I think the period of abnormal profit for poultry players is over.


Chart 1: Broiler & Egg prices from Jan 2000 to Aug 2015 (Source: The Edge Financial Daily)


Chart 2: Soyabean meal & corn prices from 2005 to 2015 (Source: Nasdaq.com_ here & here)


Chart 3: LTKM's 35 quarterly results

Valuation

LTKM (closed at RM1.56 yesterday) is now trading at a PER of 4.9 times (based on last 4 quarters' EPS of 32 sen). However, if we annualized the profit (using the 1Q2016 number), the PER for LTKM is 10.4 times. At this PER, LTKM is deemed fairly valued.

Technical Outlook

LTKM has broken below its uptrend line, SS at RM1.70. Its immediate support & resistance are RM1.30 7 RM1.70, respectively.


Chart 4: LTKM's monthly chart as at Sept 22, 2015 (Source: ShareInvestor.com)

Conclusion

Based on poor financial performance & bearish technical outlook, LTKM is rated as a TAKE PROFIT or SELL.

Due to availability of new information, the recommendation in this post has been revised to BUY ON WEAKNESS. For more, go here.

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, LTKM.

Market Outlook as at September 22, 2015

FBMKLCI failed to hang onto to its upside breakout of the neckline of the head and shoulders formation (mentioned earlier). FBMKLCI tested the neckline as well as the downtrend line, RR and reversed. It may find support at the 1620-1630 level.

 
Chart 1: FBMKLCI's daily chart as at September 21, 2015 (Source: ShareInvestor.com)

We can see that FBM70 (representing the second liners) had also tested its downtrend line cum horizontal resistance at 12400 and failed to surpass it. See Chart 2 & 3 below. 

 
Chart 2: FBM70's daily chart as at September 21, 2015 (Source: ShareInvestor.com)

 
Chart 3: FBM70's monthly chart as at September 21, 2015 (Source: ShareInvestor.com)

Based on our earlier study of Valuecap market operation in 2003, we may have seen the end of the initial round of buying. This large scale buying of blue chip stocks had propelled the index higher and when the buying subsided, the index retraced. We hope that the next phase would see steady buying on 2nd & 3rd liner; thus providing support for the broader market.

However we must be alert to the possibility that things may turn out differently as compared to 2003 since the political landscape is very different today. In addition, our market has benefited significantly from the recovery of the global equity market in 2003. Today, we may have seen a top in the global equity market with more selling to come in the weeks and months ahead.

In times like this, it is not easy to be an investor. To abstain completely is not advisable. To buy aggressively is out of the question. You would have to calibrate your buying while reminding yourself that it is likely to be a long haul. Keep in mind that there are stocks out there that have been beaten down to a level where their true value is more than the market price. Only in good times will this value be fully appreciated. The profit from the investment is the reward for taking risk in this hard times.

Hazy situation is clearing up

FBMKLCI managed to break above the neckline of the Head and Shoulders reversal pattern at the 1680. At the time of writing this post, FBMKLCI is at 1685. If we can stay above the 1680 mark, this means that we are in neither a bearish reversal mode nor a bullish up-trending mode. That means we are likely to trade sideways. Still it is an improvement from a downtrend market PROVIDED FBMKLCI stays above the 1680 mark. 

 
Chart 1: FBMKLCI's weekly chart as at Sept 17, 2015_10.30am (Source: ShareInvestor.com)

The second good news is that USD-MYR has broken below the immediate accelerated uptrend line. See Chart 2 below. 


Chart 2: USD-MYR's daily chart as at Sept 17, 2015_10.30am (Source: XE.com) 

If we look the weekly chart (Chart 3), we will see that the USD-MYR is still in an uptrend. That means that our MYR is still weakening against the USD - except now the pace of the deterioration has decelerated. The MYR may strengthen slowly, with USD-MYR possibly dropping back to the 4.00 mark in the next 1-2 week. Further strengthening of the MYR could push the USD-MYR to 3.75 (in the next 3-6 months time).


Chart 3: USD-MYR's weekly chart as at Sept 17, 2015_10.30am (Source: XE.com)   
Other good news includes CPO breaking above its medium-term downtrend line at RM2070.


Chart 4: CPO's daily chart as at Sept 17, 2015_10.30am (Source: ifs.marketcenter.com) 

And, crude oil continues to recover, with WTIC having a strong rebound yesterday. WTIC's next resistance will be at USD50 & USD54.

 
Chart 5: WTIC's daily chart as at Sept 16, 2015 (Source: Stockcharts.com)
 
The improvement in crude oil & CPO will be positive for O&G stocks as well as plantation stocks. The tentative strengthening of our MYR will be a relief for importers (like auto players) while posing as a drag for exporters (like rubber glove producers). In light of these, you should examine your stocks and re-balance it accordingly. Good luck!

Astro: Steady, As She Goes

Results Update

For QE31/7/2015, Astro's net profit dropped by 18% q-o-q or marginal 0.3% y-o-y to RM137 million while revenue rose by 3% q-o-q or 1% y-o-y to RM1.37 billion. Revenue rose y-o-y due to 0.4%-increae in revenue for Television segment (brought on by increased subscription revenue which offset the decline in advertising & other revenue) plus 14.1%-increase in revenue for Radio segment. EBITDA rose for both Television & Radio segments by 6.2% & 18.7%, respectively. Higher EBITDA for Television segment was attributable to an increase in revenue, lower content costs, lower  installation  costs, lower marketing & market  research expenses and lower selling & distribution expenses which offset the higher broadband costs, lower other operating income and impairment of other investment.

Revenue increased q-o-q due to increased revenue for Television & Radio segments.Despite higher revenue, net profit dropped q-o-q due to increase in net finance costs of RM60.8 million (brought on by discounting of transponder's deposit to its present value of RM22.0 million), unrealized forex losses from unhedged lease liability & vendor financing of RM19.5 million and higher amortization of software of RM3.2 million. The drop on net profit was softened somewhat by increase in EBITDA of RM17.3 million, lower depreciation of set-top boxes of RM3.2 million and lower tax expenses of RM14.5 million.


Table 1: Astro's last 8 quarterly results


Chart 1: Astro's last 16 quarterly results

Valuation

Astro (closed at RM2.99 last Tuesday) is now trading at a trailing PE of 28 times (based on last 4 quarters' EPS of 10.74 sen). Which ever way you look at it, Astro remains over-valued. Its PEG ratio stood at 2.3 times (based on last year's earnings growth of 12%). Nevertheless, Astro may be viewed as an income stock, with uts dividend yield of 4%.

Technical Outlook

Astro is moving sideways, with support at RM2.80-2.90. Its upside is capped by the line connecting its recent peaks, RR- posing resistance at RM3.20.


Chart 2: Astro's daily chart as at Sept 14, 2015 (Source: ShareInvestor.com)

Conclusion

Based on steady financial performance, Astro could be a good stock for long-term investment. However, with its demanding valuation and mildly negative technical outlook, Astro is not likely to charge up any time soon.

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, Astro.

SKPetro: Earnings impact by impairment

Results Update

For QE31/7/2015, SKPetro's net profit dropped by 60% q-o-q or 77% y-o-y to RM104 million while revenue increased by 24% or 4% y-o-y to RM2.8 billion. Revenue rose q-o-q primarily due to higher contributions from E&C division (coming from newly executed international projects during the period). PBT dropped 82% q-o-q due to impairment of O&G properties totaling RM539.9 million. If this impairment loss is excluded, PBT rose 79% due to higher contributions from services segment and lower expenses and corporate eliminations, partially offset by lower PBT from the Energy division.


Table 1: SKPetro's last 8 quarterly results


Chart 1: SKPetro's last 17 quarterly results

Financial Position

As at 31/7/2015, SKPetro's financial position is deemed acceptable, with adequate liquidity albeit elevated leverage. Its current ratio stood at 1.3 times while debts to equity ratio stood at 1.4 times.

Valuation

SKPetro (closed at RM1.87 Tuesday) is now trading at a trailing PE of 13 times (based on last 4 quarters' EPS of 14 sen).

Technical Outlook

SKPetro is in a downtrend in line with the sharp drop in its earnings. However, its share price has recovered from its recent low at RM1.40. This low could be its bottom as the MACD & Slow Stochastic have shown a bullish divergence.


Chart 2: SKPetro's weekly chart as at Sept 14, 2015 (Source: Share Investors)
 
Conclusion

After its recent sharp selldown, SKPetro can be considered for long-term investment. Its financial performance and valuation are fairly decent even in the tough environment for O&G sector.

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, SKPetro.

Malaysia Day 2015

On this day, let's come together to celebrate the Malaysia Day in peace & harmony. 


(Source: Reload Food)

Let's appreciate our beautiful home.


Tanahair Ku - Time Lapse Throughout Malaysia from fwukai quah on Vimeo.

Our diverse cultural heritage

 
(Source: Kasma.my)

Our future with limitless possibility


(Source: Attractions in Malaysia)

Together we shall fulfill the dreams of our forefathers; achieve our ambition of becoming a developed nation and creating a home where our children can live in peace. Selamat Hari Maalysia.