PMetal: Earnings Dipped Sequentially

Results Update

For QE30/9/2016, PMetal's net profit dropped by 16% q-o-q but rose 317% y-o-y to RM123 million while revenue rose 10% q-o-q or 71% y-o-y to RM1.737 billion.  PBT dropped 23.4% q-o-q as preceding quarter profit include insurance claim of RM45 million and unrealized forex gain of RM4 million. Excluding these 2 exceptional items, PBT rose 1% to RM201.5 million.


Table 1: PMetal's last 8 quarterly results


Chart 1: PMetal's 36 quarterly results

Valuation

PMetal (closed at RM4.35 last Friday) is now trading at a PER of 14 times (based on last 4 quarters' EPS of 30.93 sen). In addition, it pays a decent dividend, with a yield of 2.0%. Based on these, PMetal is deemed to be fairly valued.

Corporate Exercise

PMetal will be carrying out a share split of 1-to-2; and bonus share issue of 2-for-5 (after the split) [here]. The ex-date dates of this exercise is November 4 (here and here). As the exercise will be carried out soon, I expect PMetal share price to be well-supported for the next few days.

Technical Outlook

PMetal broke above the 'horizontal' line, AB at RM3.20 in April. It is now rising in an intermediate uptrend line, SS with support at RM4.20.


Chart 2: PMetal's weekly chart as at Oct 28, 2016 (Source: ShareInvestor.com)

PMetal is rising in a long-term uptrend since late 2005. In fact, PMetal also seems to be moving in a steady cycle, where its share price had peaked every 3-4 years. If the cyclical price movement persists, PMetal may not peak until mid-2017.


Chart 3: PMetal's monthly chart as at Oct 28, 2016 (Source: ShareInvestor.com)

Conclusion

Based on satisfactory financial performance, fairly attractive valuation and bullish technical outlook, PMetal is a 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.