For QE31/3/2016, Kianjoo's net profit dropped by 49% q-o-q or 58% y-o-y to RM12 million while revenue was mixed- dropped by 7% q-o-q but up by 24% y-o-y to RM428 million. Revenue dropped q-o-q due to shutdown during New Year & CNY. PBT dropped due to higher forex losses of RM25.2 million.
Table 1: Kianjoo's last 8 quarterly results
Chart 1: Kianjoo's last 38 quarterly results
Valuation
Kianjoo (closed at RM3.14 yesterday) is now trading at a PE of 12 times (based on last 4 quarters' EPS of 25.87 sen). At this multiple, Kianjoo is deemed attractively valued. However, Kianjoo's earnings for the last 2 quarters has been quite disappointing. If this level of earnings persists, Kianjoo's PER will increase and its share price will take a knock.
Technical Outlook
Kianjoo is in a long-term uptrend line with support at RM3.10. The stock made recent high of RM3.40 in April 2014, November 2015 & April 2016. The last 2 times it went up to RM3.40 were not done with conviction. As such, I doubt the stock will revisit this high any time soon. Instead we should be concerned that the stock may not be able to hold onto its long-term uptrend line. A break below this uptrend line as well as the psychological level of RM3.00 could signal a reversal of its gradual uptrend that stretches back to 2010.
Chart 2: Kianjoo's weekly chart as at May 19, 2016_12.30pm (Source: ShareInvestor.com)
Chart 2: Kianjoo's monthly chart as at May 18, 2016 (Source: ShareInvestor.com)
Conclusion
Based on satisfactory financial performance, reasonable valuation & positive technical outlook, I would rate Kianjoo a HOLD for now. If the stock were to break below the RM3.00 mark, the rating would be revised to a SELL.
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, Kianjoo.
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