Results Update
For QE31/12/2015, Muda's
net profit rose 32% q-o-q
or 139% y-o-y to RM9.9 million while its turnover was up 33% q-o-q or 14%
y-o-y to RM347 million. Revenue rose q-o-q as the peak season sales for stationery products in the Trading Division and better selling prices of products in the Manufacturing Division have contributed to the one third increase in revenue for the quarter under review. Better selling price of products and higher margins for stationery products have raised the gross margin of the Group to 21.5% for the quarter under review and lifted profit before tax by 119.3% to RM18.76 million, compared to the preceding quarter.
FY2015 net profit rose 20.7% from RM21.8 million to RM26.3 million while revenue rose 7.0% from RM1.051 billion to RM1.124 billion. Increase in revenue was attributable to 4.4% and 3.3% increase in sales volume and prices of paper mill
products respectively as a result of the weakened ringgit
which prompted domestic customers to substitute foreign supplies with domestic
products. Profits rose because of higher revenue and better profit margin from both the manufacturing & trading divisions.
Table: Muda's last 8 quarterly results
Chart 1: Muda's last 39 quarterly results
Valuation
Muda
(closed at RM2.16 last Friday) is trading at a PE of 25 times (based on last
4 quarters' EPS of 8.6 sen). At this PER, Muda is deemed fully valued.
Technical Outlook
Muda
broke through the 10-w SMA line as well as the 20 & 30-week EMA lines. The last time this happened was in late September 2014 when the share price continued to slide to a low of RM1.10.
Chart 2: Muda's weekly chart as at Mar 11, 2016 (Source: ShareInvestor.com)
From Chart 2, we can see that Muda pulled back after it surpassed its 2014 high of RM2.45 in January this year. This pullback could be a bearish double-top reversal.
Chart 3: Muda's monthly chart as at Mar 11, 2016 (Source: ShareInvestor.com)
Conclusion
Based on demanding valuation and tricky technical outlook, Muda is rated a SELL INTO STRENGTH.
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, Muda.
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