Tasek: Earnings dropped due to annual plant maintennace

Results Update

For QE30/9/2015, Tasek's net profit dropped 42% q-o-q or 16% y-o-y to RM18 million while revenue was mixed- down 9% q-o-q but up 11% y-o-y to RM166 million. The Group's profit before tax dropped q-o-q mainly due to lower profit from the Cement Segment which was impacted by lower sales volume and lower margin arising from the annual plant maintenance in July and August 2015. In addition, domestic sales volume of cement was affected by the shorter business cycle due to the Hari Raya Puasa festive holidays. On the other hand, Concrete Segment registered an increase in profit mainly contributed by higher sales volume and better average net pricing. Lower interest income and lower share of profit from the Group's associated company also affected the Group's profit for the current quarter.


Table: Tasek's last 8 quarterly results

 
Chart 1: Tasek's last 30 quarterly results 

High Dividend Payout

Tase's dividend payout was on a rising trend for a few years. That has come to an end this year (see Chart 2).

 
Chart 2: Tasek's Dividend Payout for last 27 quarterly results  

Valuation

Tasek (closed at RM14.80 as at 4.30pm today) is now trading a PE of 20.6 times (based on last 4 quarters' EPS of 72 sen). At this PER, Tasek is deemed overvalued. Despite the decline in dividend payout, Tasek can still boast a high DY of 11%. In addition, it still has RM239 million in cash - equivalent to cash holding of RM1.94 per share - that will allow the company to continue paying handsome dividend for a few more years.

Technical Outlook

The stock is trading slightly below the long-term uptrend line  at RM15.00. Below that, it has a strong horizontal support at RM14.00. A break of  both the uptrend line support at RM15.00 & horizontal support at RM14.00 could signal a bearish reversal for the stock.


Chart 4: Tasek's weekly chart as at Nov 3, 2014 (Source: Tradesignum)

Conclusion

Despite the weaker financial performance, Tasek is rated a HOLD based on attractive dividend yield and neutral  technical outlook (albeit marginally below the long-term uptrend line). 

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, Tasek.