Results Update
For QE31/1/2016, BJAuto's net profit dropped 22.8% q-o-q or 12.2% y-o-y to
RM41
million while revenue was mix: dropped 3.7% q-o-q but rose 34.4% y-o-y to RM523 million. Revenue dropped by 3.7% q-o-q due to lower sales volume recorded by both local and the Philippine operations. In line with lower revenue, pre-tax profit for the current quarter dropped by 21.0% q-o-q due to reduced gross profit margin caused by higher vehicle cost in Malaysia as Ringgit Malaysia continues to depreciate against Japanese Yen and higher spending on promotion related expenses in Malaysia.
Table: BJAuto's last 8 quarters' financial performance
Going forward, I see revenue to stay flat - unlike past
2nd-4th quarter revenue growth - buyers brought forward their purchases
for fear of price hike in later part of 2016. Earnings may inch up as
the strengthening of MYR would help to shore up the company's profit
margin.
Chart 1: BJAuto's last 15 quarters' financial performance
Valuation
BJAuto (closed at RM2.19 last Friday) has a PER of
12.4 times (based on last 4 quarters' EPS of 17.7 sen). At this PER, BJAuto is deemed fairly valued.
Technical Outlook
BJAuto is now consolidating in a triangle, ABCD. A breakout of this triangle will point the way forward for the stock.
Chart 2: BJAuto's weekly chart as at Mar 11, 2016 (Source: Share Investors)
Conclusion
Notwithstanding the sequential dip in its earning, BJAuto's rating is kept as a HOLD based fair valuation and prospects for improved earning ahead.
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, BJAuto.
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