For QE30/6/2016, PetronM's net profit rose 270% q-o-q to RM61 million on the back of a 10%-increase in revenue to RM1.83 billion. Net profit dropped 16% y-o-y on the back of lower revenue, which dropped 19% y-o-y due to lower crude oil (which declined from USD58 to USD40 per barrel) and finished product prices. The lower selling prices had more than offset the volume increase to 8.8 from 7.7 million barrels. PBT was lower y-o-y due to lower profit margin as a result of weaker price differentials between finished products and crude oil.
Table: PetronM's last 8 quarterly results
Chart 1: PetronM's last 16 quarterly results
Valuation
PetronM (closed at RM4.24 yesterday) is now trading at a PER of 6.8 times (based on annualized EPS of 62.75 sen). At this PER, PetronM is deemed fairly attractive.
Technical Outlook
PetronM broke above its downtrend line, RR at RM3.80 last week. It rallied to test the horizontal line at RM4.50 before correcting. Its immediate support is at RM4.20 and immediate resistance is at RM4.50.
Chart 2: PetronM's daily chart as at Aug 18, 2016(Source: ShareInvestor,com)
Conclusion
Based on imporved financial performance, fairly attractive valuation & positive technical outlook, PetronM could be a good stock for a medium-term investment. Rating revised from SELL to BUY.
Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision
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