For QE31/10/2015, Apollo's pre-tax profit increased by 12% q-o-q or 106% y-o-y to RM14.5 million while revenue also increased by 8% q-o-q or 5% y-o-y to RM54 million. Increased demand from both export and local markets had contributed to higher sales & profits. In addition, profits was also boosted by foreign exchange gain on the depreciation of Ringgit Malaysia against USD dollar. Despite higher pre-tax profit recorded, Apollo's net profit dropped q-o-q due to higher tax expense resulting from Deferred Tax charge of RM3.1 million.
Table 1: Apollo's last 8 quarterly results
Apollo's quarterly revenue & profits have been stagnant around RM50 million & RM10 million, respectively. Despite the lower exchange rate, Apollo's top-line and bottom-line did not show significant improvement. If MYR were to recover in 2016, profits could well drop back below RM10 million mark.
Chart 2: Apollo's last 31 quarterly results
Valuation
Apollo (closed at RM5.71 yesterday) is now trading at a PE of 12.8 times (based on last 4 quarters' EPS of 44.5 sen). Apollo is deemed fairly valued.
Technical Outlook
Apollo is in a long-term uptrend line. Its immediate resistance is around the RM6.00 mark. If it fails to clear this resistance, it could turn out to be a double-top reversal.
Chart 2: Apollo's monthly chart as at Dec 30, 2015 (Source: ShareInvestor.com)
Conclusion
Despite the better financial performance, reasonable valuation & positive technical outlook, Apollo's upside potential is limited. It could be a good idea to TAKE PROFIT if you have a position in 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, Apollo.
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