POS: Share price dragged down by lower earnings

Results Update

For QE30/9/2015, POS's net profit plummeted by 85% q-o-q or 90% y-o-y to RM3.5 million while revenue increased by 2% q-o-q or 7% y-o-y to RM399 million.


Table: POS's last 8 quarterly results

From Chart 1, we can see that the lower profit for QE30/9/2015 was due to lower profits for all segments (especially, the Mail segment) and continued losses for the Retail segment.


Chart 1: POS's last 4 quarters' segmental revenue & profits


Chart 2: POS's last 40 quarterly results

Valuation

POS (closed at RM3.29 as at 3.45pm today) is now trading at PE of 13.9 times (based on last 4 quarters' EPS of 23.7 sen). At this PER, POS is deemed fairly valued, provided its earnings recover from in the following quarters.

Technical Outlook

POS may soon test its long-term uptrend line, with support at RM3.30-3.20. Those who had sold off in May based on my earlier recommendation, can look to buyback into the stock. See earlier post (here).


Chart 3: POS's monthly chart as at Dec 7, 2015_3.00pm (Source: ShareInvestor.com)

Conclusion

Despite poorer financial performance, I would rate POS a BUY ON WEAKNESS as it approaches the long-term uptrend line support at RM3.00-3.20.

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, POS.