RCECAP: Earnings Soared

Result Update

For QE30/6/2016, RCECap's net profit soared 153% q-o-q or 86% y-o-y to RM17.5 million. Its revenue rose 17% q-o-q or 39% y-o-y to RM52 million. Profits increased q-o-q mainly due to higher fee-based income by RM5.9 million and lower loan impairment by RM4.8 million.


Table: RCECap's last 8 quarterly results

Looking at the Chart 1, we can see that RCECap's financial performance continued to crawl up after bottoming in last 2013.


Chart 1: RCECap's last 37 quarterly results

Valuation

RCECap (traded at RM1.02 as at 9.30am) has a trailing PE of 7.0 times (based on last 4 quarters' EPS of 14.76 sen). However, its last 4 quarters' EPS includes exceptional gain on disposal of investment property and fee-based income totaling RM10.8 million. If we were to exclude these items, its EPS would be lowered to 11.42 sen while bumping up its PER to 8.8 times. This would put RCECAp nearly at par with AEONCR (closed at RM13.90 yesterday). AEONCR has a trailing PER of 9.2 times (based on its last 4 quarters' EPS of 152 sen). Thus, at the current price of about RM1.02, RCECAP is fairly valued.
(Note: RCECAP had a 4-to-1 share consolidation in April this year.)

Technical Outlook

RCECap is in an upward channel with support at the lower line at RM0.70 and resistance at the upper line at RM1.20.


Chart 2: RCECap's monthly chart as at Aug 10, 2016 (Powered by ShareInvestor.com)

Conclusion

Based on improved financial performance, fair valuation & positive technical outlook, RCECap is good stock for long-term investment.

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.