BJFood: Crossed Its Intermediate Downtrend Line

Technical Outlook
 

BJFood has broken above its intermediate downtrend line, RR at RM1.80. If the stock can stay above the breakout level, the next upleg may soon begin. Note that MACD is now above the zero line and +DMI is above -DMI (indicating possible uptrend).


Chart 1:BJFood's weekly chart as at Mar 10, 2017 (Source: MalaysiaStock.biz)


Chart 2: BJFood's monthly chart as at Mar 10, 2017 (Source: MalaysiaStock.biz) 

Recent Results

The latest available result for BJFood is for QE31/10/2016, where its net profit rose 1% q-o-q but dropped by 19% y-o-y to RM5 million while revenue rose 5% q-o-q or 10% y-o-y to RM149 million.

Revenue and pre-tax profit increased slightly mainly due to higher contribution from Starbucks operations in Malaysia. Despite facing headwinds from a weak MYR & poor consumer sentiment, BJFood "expects Starbucks to maintain its revenue growth momentum, especially with its new fast moving consumer goods business, and this will contribute positively to the operating results of the Group going forward." 

Table: BJFood's last 8 quarterly results


Graph: BJFood's last 28 quarterly results (Note: The sharp spike in earnings was due to the extraordinary gain of RM158.6 million recorded in QE31/10/2014) 

Valuation

BJFood (closed at RM1.96 last Friday) is now trading at a PE of 35 times (based on last 4 quarters' EPS of 5.68 sen. At this PER,  BJFood is deemed overvalued.

Conclusion

Based on improving financial performance & mildly positive technical outlook, BJFood' rating is now revised from a SELL to a HOLD.

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.