Apollo: Earnings Plummeted

Result Update

For QE30/4/2016, Apollo's pre-tax profit dropped 76% q-o-q or 73% y-o-y to RM1.7 million while revenue also increased by 4% q-o-q or 1% y-o-y to RM53 million. Profits dropped q-o-q due to fluctuation of foreign currency exchange rate and provision of impairment loss on one  of  the  leasehold  building of RM823k.


Table 1: Apollo's last 8 quarterly results

In the previous post, I opined that "(i)f MYR were to recover in 2016, profits could well drop back below RM10 million mark". I'm still surprised by the sharp drop in earnings in the past 2 quarters.


Chart 2: Apollo's last 35 quarterly results

Valuation

Apollo (closed at RM5.68 yesterday) is now trading at a PE of 15 times (based on last 4 quarters' EPS of 37.26 sen). Apollo is deemed fully valued.

Technical Outlook

Apollo is in a long-term uptrend. Its immediate support from the 2013 high is about RM5.50-5.60.


Chart 2: Apollo's monthly chart as at June 28, 2016 (Source: ShareInvestor.com) 

From the weekly chart, we can see that RM5.60 is also support from the intermediate uptrend line, S1-S1.


Chart 3: Apollo's weekly chart as at June 28, 2016 (Source: ShareInvestor.com) 

Conclusion

Based on Apollo's unexciting performance & full valuation, I maintain my rating of TAKE PROFIT. However, there is no urgent need to sell immediately nor aggressively. I think your capital may be better deployed in another F&B stock, like Oldtown.

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.