Magni: Earnings Continued To Rise

Results Update

For QE30/4/2017, Magni's net profit rose 30% q-o-q or 104% y-o-y to RM38 million while revenue rose 3.6% q-o-q or 54% y-o-y to RM299 million. Group revenue increased by 3.6% q-o-q due to 4.8% increase in Garment revenue (resulting from favourable foreign exchange movements and higher sale orders received) and 5.6%-decline in Packaging revenue (mainly due to the closure of SIPP's business in Q4-FYR 2017). Group PBT increased by 13.7% due to 4.3%-increase in Garment PBT (mainly due to higher revenue and lower foreign exchange loss) and 278.7%-increase in Packaging PBT (which was due to the reversal of SIPP's staff benefits and business closure costs totaling RM0.491 million in Q4-2017, and the absence of provision of SIPP's closure costs of RM2.877 million in Q3-FYR 2017). Stripping of these provision & reversal, packaging PBT for Q4-2017 increased by 11.9% versus Q3-FYR 2017 mainly due to higher other operating income.

Table: Magni's last 8 quarterly results


Graph: Magni's last 33 quarterly results

Valuation

Magni (trading at RM7.41 as at 10:20am) has a trailing PE of 10 times (based on last 4 quarters' EPS of 73.8 sen). Its last 3 years' earning CAGR was at 65%; giving the stock a PEG ratio of less than 0.2x. At this PEG ratio, Magni's valuation is still very attractive. 

Technical Outlook

Magni is in a long-term uptrend.


Chart: Magni's monthly chart as at Jun 29, 2017_10.00 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance, attractive valuation and bullish technical outlook, Magni remains a very 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.Results Update

For QE31/1/2017, Magni's net profit rose 3.6% q-o-q or 13.4% y-o-y to RM29.6 million while revenue rose 3.3% q-o-q or 7.5% y-o-y to RM289 million. Revenue increased q-o-q due to 3.7%-increase in Garment revenue as a result of favorable foreign exchange rate but was partially weighed down by lower sale orders received and 0.4%-increase in Packaging revenue as a result of higher sale orders received. PBT increased q-o-q due to higher PBT for Garment PBT of 14.2% mainly due to higher revenue and higher foreign exchange gain (Other operating income) which was partially offset by a 158.5%-drop in packaging PBT mainly due to the provision of SIPP's closure costs of RM2.877 million. Had there been no provision for the closure costs, packaging PBT would have been higher by 18.6% versus the preceding quarter mainly due to better productivity, aided by a slight increase in revenue.

Table: Magni's last 8 quarterly results


Graph: Magni's last 32 quarterly results

Valuation

Magni (trading at RM5.16 yesterday) has a trailing PE of 8.4 times (based on last 4 quarters' EPS of 61.73 sen). Its last 2 years' earning CAGR was at 50%; giving the stock a PEG ratio of less than 0.2x. At this PEG ratio, Magni's valuation is still very attractive. 

Technical Outlook

Magni is in a long-term uptrend. The stock broke above the January 2016 high of RM4.60; signaling the continuation of the long-term uptrend.


Chart 1: Magni's monthly chart as at Mar 16, 2017 (Source: ShareInvestor.com)


Chart 2: Magni's weekly chart as at Mar 16, 2017 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance, attractive valuation and bullish technical outlook, Magni remains a very 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.

BursaStation Quarterly Market Outlook

I will be speaking at the BursaStation Quarterly Market Outlook event next month. It will be an 1-hour presentation entitled Market Observation In Brief where I will be sharing about how we can use both simple techniques or ideas from Fundamental Analysis and Technical Analysis to select stocks for investment. I am looking forward to meeting up with you.

Date:     8 July 2017 (Saturday)
Time:    10:00am-1:00pm
Venue:  Theatrette Room (LG Floor)
             Bursa Malaysia Exchange Square
             Bukit Kewangan
             50200 Kuala Lumpur

If you like to attend the event, please sign up here. 

Selamat Hari Raya AidilFitri

I like to wish all Muslim readers a joyous and blessed Hari Raya Aidilfitri.


From 123Greetings.com

WTIC: At The Crossroad

Crude oil prices have been sliding! How low can it go?

On June 14, I did a study for my record and came up with the target for the current decline of USD42. Firstly, I drew a best fit channel (AB-A1B1) which captured the price movement since August 2016. Within this "rounding channel", I managed to draw 3 lines; the first line for the top (X1Y1), next line for the preceding lows (X2Y2) and current line for the low to come (XY). The line, XY intersect with the lower line for the "rounding channel) at USD42.


Chart 1: WTIC's daily chart as at Jun 14, 2017 (Source: Stockcharts.com)

Today I did one more study where I drew 2 ovals onto the chart for WTIC. We can see prices are within the upper reaches of the red oval while staying away from the blue oval. The intersection of the 2 ovals is again at USD42. This should provide the support for a rebound.


Chart 2: WTIC's daily chart as at Jun 22, 2017 (Source: Stockcharts.com)

Based on my "unconventional" studies, I think WTIC is poised for a rebound. In line with that, I would recommend that you do not join the selling of O&G stocks in the current market. In fact, I believe that O&G stocks are now at a relatively good level for slow accumulation. Please exercise careful discretion if you choose to follow this suggestion.

SCGM: Earnings Stagnated

Results Update

In QE30/4/2017, SCGM's net profit was mixed- dropped 27% q-o-q but rose 47% y-o-y to RM5.1 million while revenue rose 15% q-o-q or 63% y-o-y to RM53 million. Revenue increased q-o-q due to higher demand from both local and export markets. PBT dropped q-o-q mainly due to increase in operating expenses which was attributed to higher cost of raw materials.

 
Table: SCGM's last 8 quarterly results

 
Graph: SCGM's last 33 quarterly results

Valuation

SCGM (closed at RM4.09 yesterday) is now trading at a PE of 24X (based on last 4 quarters' EPS of 17.17  sen). With earning stagnating, the high PER is not justifiable.

Technical Outlook

SCGM is in a long-term uptrend line, SS with support at RM3.60-3.70. MACD has hooked down- indicating the possibility of a near term pullback. This is also borne out by directional movement index, with +DMI is dipping while -DMI is rising.


Chart 1: SCGM's monthly chart as at Jun 21, 2017 (Source: Malaysiastock.biz)


Chart 2: SCGM's daily chart as at Jun 21, 2017 (Source: ShareInvestor.com)

Conclusion

Despite satisfactory financial performance & still positive technical outlook, I am revising my previous rating from a Trading BUY to a SELL INTO STRENGTH due to demanding valuation.

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.

Refinery Stocks Coming Under Selling Pressure

In May, PetronM and Hengyuan rallied strongly to their high. Since then, they have been sliding. Most investors would think that the reason for this is the drop in crude oil price. That's not quite right. 

 
Chart 1: PetronM's monthly chart as at Jun 21, 2017_10.00am (Source: ShareInvestor,com)

 
Chart 2: Hengyuan's monthly chart as at Jun 21, 2017_10.00am (Source: ShareInvestor,com)

I had posted before that the earnings of refinery companies depend on crack spread, which is the differential between the price of crude oil and petroleum products extracted from it. To give you an idea how that impact the earnings of these companies, I have created a graph comparing their earnings for the period Mar 2014 to Mar 2017 with the crack spread for that period. As you can see the earnings dropped whenever crack spread dropped. 


Chart 3: Crack Spread (Front Month) and PetronM & Hengyuan's profits for Mar 2014-Mar2017 (Source of Chart: Quandl)

Now, crack spread is again dropping. The smart money is again selling these stocks since they have rallied so sharply in May. If you have good paper profit sitting in these stocks, you should consider SELLING INTO STRENGTH.

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

Superln: Earnings Remained Healthy

Result Update

In QE30/4/2017, Superln's net profit rose by 2% q-o-q or 72% y-o-y to RM6.4 million while its revenue rose by 26% q-o-q or 37% y-o-y to RM32.5 million. Revenue rose y-o-y due to increased revenue for both the manufacturing & trading divisions.

The manufacturing division recorded higher revenue of RM28.4 million (FY 2016 : RM22.2 million) due to higher sales volume while PBT rose to RM7.9 million (FY 2016 : RM4.9 million) mainly due to the increase in total gross profit generated from higher volume of sales and favourable exchange rate.

Revenue for the trading division of RM4.1 million (FY 2016 : RM1.4 million) was mainly due to the increased sales of copper pipes to local customers. As a result, that division PBT increased to RM0.2 million compared to RM0.01 million previously.

Table: Superln's last 8 quarters' results


Graph: Superln's last 17 quarters' results

Valuation

Superln (closed at RM1.92 yesterday) is now trading at a trailing PER of 13x (based on last 4 quarters' EPS of 14.94 sen). Based on an earning CAGR of 60% over the past 3 years, Superln's PEG ratio is only 0.2x. As per the notes to its accounts, the company plans to invest approximately USD 4 million for the expansion plans and is targeting for Factory 4 to commence production in the FY2019. The new factory would enable Superln to strengthen its presence and support its customers in Vietnam and neighboring countries. Hence, Superln will continue to be a growth stock trading at attractive earnings multiple.

Note: Superln has completed its 1-for-2 share split in early June. This exercise may explain the strong rally in the share price for the past 3 months. It is not unusual that the stock may consolidate its recent gain before it continues with its upward trajectory.

Technical Outlook

Superln is in an uptrend line, which accelerated after it broke above the line, AB at RM1.30-1.33.


Chart 1: Superln's weekly chart as at Jun 20, 2017 (Source: Shareinvestor.com)


Chart 2: Superln's monthly chart as at Jun 20, 2017 (Source: Shareinvestor.com)

Conclusion

Based on good financial performance, attractive valuation & positive technical outlook, Superln could be a good stock for trading BUY.long-term investment. If you want to get into this stock, I think any price below RM2.00 will be a good entry.

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.

MBSB: Uptrend May Continue

In January, I posted on the start of MBSB's next upleg (here). From RM0.96, MBSB rose to a high of RM1.36 in May. The stock consolidated for the past 6 weeks. Today it looks like MBSB is trying to break above the horizontal resistance at RM1.36. This could be due to market reaction to the news that it has applied for BNM's approval to begin merger talk with Asian Finance Bank.

If it can break above and stay above the horizontal line at RM1.36, MBSB could be a good trading BUY. If you choose to buy into MBSB, please exercise careful discretion given the current weak market sentiment. Do not over-trade! 


Chart: MBSB's daily chart as at Jun 20, 2017_11.40am (Source: Shareinvestor.com)

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.

Topglov: Earnings Dropped Sequentially

Results Update

For QE31/5/2017, Topglov's net profit dropped 6% q-o-q but rose 24% y-o-y to RM78 million while revenue rose 2% q-o-q or 29% y-o-y to RM870 million. PBT dropped q-o-q resulting from the time lag in passing on cost to the customers, as average prices for natural rubber latex and nitrile latex rose 18.7% and 24.1% respectively.

 
Table: Topglov's last 8 quarterly results


Graph: Topglov's last 44 quarterly results

Valuation

Topglov (closed at RM5.61 last Friday) is now trading at a trailing PE of 23.5X (based on last 4 quarters' EPS of 23.92 sen). At this PER, Topglov is deemed fully valued.

Technical Outlook

Since it made a high of RM7.00 in December 2015 & January 2016 - coincided with its blown-out net profit of RM128 million in November 2015 - Topglov is moving within a rising trading range (AB A'B'), currently at RM4.50 & RM5.60. Last week, it broke to the upside of the trading range and made a high of RM5.95 on June 9. It is now resting just above its trading range or will it breakdown into the trading range again?

 
Chart 1: Topglov's weekly chart as at as at Jun 16, 2017 (Source: ShareInvestor.com)
 

Chart 2: Topglov's monthly chart as at as at Jun 16, 2017 (Source: ShareInvestor.com)

Conclusion

Based on weaker financial performance, full valuation & unexciting technical outlook, I think it may be a good idea to take some profit on Topglov. Thus I revise my rating for Topglov from a HOLD to a REDUCE.

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.

Alumimium Stocks Looking Toppish (updated)

Aluminium stocks, such as PMetal, LBAlum, Tongher & Arank, have rallied strongly over the past 1 & 1/2 years.


Chart 1: PMetal & LBAlum's monthly chart as at as at Jun 16, 2017 (Source: ShareInvestor.com)


Chart 2: Tongher & Arank's monthly chart as at as at Jun 16, 2017 (Source: ShareInvestor.com)
 
When you pair aluminium price chart with individual stock price chart, you can see that the stock prices have rallied upward on the back of improvement in the metal price, and vice versa.


Chart 3: Aluminium & PMetal's chart as at Jun 16, 2017 (Source: Investing. com & ShareInvestor.com)


Chart 4: Aluminium & LBAlum's chart as at Jun 16, 2017 (Source: Investing. com & ShareInvestor.com)
 

Chart 5: Aluminium & Tongher's chart as at Jun 16, 2017 (Source: Investing. com & ShareInvestor.com)


Chart 6: Aluminium & Arank's chart as at Jun 16, 2017 (Source: Investing. com & ShareInvestor.com)

The reason why share prices of these aluminium companies have been rising is because their profits have risen in line with the price of aluminium. What may happen when aluminium price starts to come off?


 
Chart 7: Aluminium price & Aluminium Companies' Profits from 2010-2017 (Source: Investing. com)

If you study the aluminium price chart, you can see that aluminium prices could have make a top- especially after it touched the line, AB which has capped the price rallies in the past 5 & 1/2 years. The indicators are leaning towards a bearish outlook for aluminium:

• MACD has hooked down
• +DMI is dropping; -DMI is rising; and, the ADX is declining
• Stochastic RSI is now in oversold territory, and may remain here for a while if prices should trend lower in a downtrend.

Chart 8: Aluminium's weekly chart as at Jun 16, 2017 (Source: Investing. com)

Based on the above negative technical outlook for aluminium, I believe you should avoid aluminium stocks or take profit if you have position in aluminium stocks.

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.

Market Outlook as at Jun 15, 2017

If you look at FBMKLCI or FBMEMAS, you won't get the feeling that our market is struggling. We are at the high!


Chart 1: FBMKLCI & FBMEMAS as at Jun 15, 2017 (Source: Shareinvestors.com)

Once you start to look at 2nd & 3rd liner stocks, you will see that many stocks are off their high & quite a few are back to their February prices. This is borne out by FBM70 & FBMSCAP.


Chart 2: FBM70 & FBMSCAP as at Jun 15, 2017 (Source: Shareinvestors.com)

The same picture greets us when we look at FBMACE & FBMFLG!


Chart 3: FBMACE & FBMFLG as at Jun 15, 2017 (Source: Shareinvestors.com)

The "strength" of our FBMKLCI comes from one sector, Finance Services. Even here, the strength is concentrated on a few out-performers, such Maybank and CIMB while others are badly mauled in the past few weeks, such as AMBANK, RHBBANK & AFG. Trading Services, with big names like Tenaga & TM, are not contributing to the "strength" in our FBMKLCI.


Chart 4: Finance & TradServ as at Jun 15, 2017 (Source: Shareinvestors.com)

A market that's so narrow is not a healthy market. There is so much very little that the current crop of market leaders can do if the broad market refused to participate. At some point, the market must retreat and consolidate. In fact, there are many stocks that are in a consolidating mode now. Examples include the fallen banking stocks such as AMBANK, RHBBANK & AFG. Re-positioning ourselves from Maybank or CIMB to AMBANK, RHBBANK & AFG may be a good idea since the fallen are less likely to fall further in the weeks to come.Take Taking shelter in stocks with high dividend yield stocks such as BJToto that had fallen is also not a bad idea. In this uncertain time, we should avoid chasing the fast & furious and opt for safety in the slow and steady!! As always, good luck to you all!

BJFood: Its First Loss

Results Update

For QE30/4/2017, BJFood's pre-tax profit dropped 86% q-o-q or 87% y-o-y to RM1.0 million while revenue was mixed - down 7% q-o-q but up 9% y-o-y - to RM151 million. Revenue and pre-tax profit in the fourth quarter dropped q-o-q due to the absence of calendar year end festive sales, school holidays and Christmas season. Bottom-line was further exacerbated by the impairment of fixed assets of RM4.433 million and intangible assets of RM0.539 million incurred during the fourth quarter as measures are taken to curtail future losses. As a result, BJFood reported its first quarterly net loss of RM3.366 million!


Table: BJFood's last 8 quarterly results


Graph: BJFood's last 30 quarterly results 

Valuation

BJFood (closed at RM1.53 yesterday) is now trading at a PE of 50 times (based on last 4 quarters' EPS of 3.01 sen. At this PER, BJFood is deemed overvalued.

Technical Outlook

After a false breakout in March, BJFood is once again in its intermediate downtrend line with resistance at RM1.70.


Chart 1: BJFood's monthly chart as at Jun 15, 2017_12.30 (Source: ShareInvestor.com)

Conclusion

Based on weak financial performance & demanding valuation, I revise BJFood's rating from a HOLD to a REDUCE.

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.

Astro: Earnings Weaker y-o-y

Results Update

For QE30/4/2017, Astro's net profit rose 35% q-o-q but dropped 3% y-o-y to RM196 million while revenue dropped 5% q-o-q or 3% y-o-y- at RM1.326 billion.

Revenue dropped y-o-y mainly due to a decrease in licensing, subscription and advertising revenue. The decrease in licensing revenue was due to loss of content recovery for sports channel. The decrease in subscription revenue was mainly due to lower package take-up. Lower advertising revenue in the current quarter owing to Chinese New Year advertisement spending recorded in the corresponding quarter.

Net profit decreased y-o-y due to increase in the proportion of content costs against revenue and increase in net finance costs, offset by lower depreciation of property, plant and equipment. Higher net finance cost was due to lower unrealised forex gain arising from unhedged non-current balance sheet liabilities comprising, finance lease liabilities and vendor financing.


Table: Astro's last 8 quarterly results

Astro's revenue seems to have broken its "uptrend". Can the profits "uptrend" sustain if revenue uptrend ceased? The break in the revenue uptrend is a concern, especially with the start of the Free Digital Broadcast under MYTV.


Graph: Astro's last 23 quarterly results

Valuation

Astro (closed at RM2.70 yesterday) is now trading at a trailing PE of 23 times (based on last 4 quarters' EPS of 11.86 sen). At this PER, Astro is fairly valued. However, Astro paid out dividend quarterly which amounted to 12.50 sen for the last 4 quarters; giving the stock a decent DY of  4.6%.

Technical Outlook

Astro is in a downtrend line, at RM2.80.Immediate support is from the horizontal line at RM2.50.


 Chart: Astro's weekly chart as at Jun 15, 2017_12.30pm (Source: ShareInvestor.com)

Conclusion

Despite its steady financial performance and fair valuation, Astro's rating remains a HOLD because it has not broken above its downtrend line.

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.

Genting: Intermediate Uptrend Has Ended

On June 7, Genting broke its intermediate uptrend line, SS which dates back to December last year. To stay within that uptrend line, Genting must quickly go back above RM9.85. Not only did Genting fail to do so, it also broke below its flag formation yesterday. This means that Genting’s intermediate uptrend has now reversed into a downtrend.

Chart 1: Genting's daily chart as at Jun 13, 2017 (Source: Shareinvestor.com)  

However, Genting still has a chance of not entering into an intermediate downtrend if it can stay above its previous long-term downtrend line, RR at RM9.60 (see the next chart). If Genting can stay above this price level, it has a chance of moving sideways and avoiding an immediate downtrend. 

Chart 2: Genting's monthly chart as at Jun 13, 2017 (Source: Shareinvestor.com) 

I would recommend investors to sell or reduce your position in Genting based on the following:

1) the breakdown of the intermediate uptrend line at RM9.85; thus ending the hope of higher prices, and

2) the downside breakout of the flag formation – which means a bearish reversal & possibly lower prices ahead.

You can choose one of these 2 options:

1) Sell on strength if Genting rose to RM9.70-9.80

2) Postpone your selling with the hope that the long-term downtrend line support at RM9.60 may forestall the further price decline. This may give an opportunity for Genting to recover back into the flag formation or, better still, above the violated intermediate uptrend line (no longer at RM9.85 but at higher prices at RM9.90-9.95). However, if the support at RM9.60 fails, the follow-thru selling can be fast & furious.

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.

Genm: Intermediate Uptrend Has Ended

In late May, GenM broke its intermediate uptrend line, SS (at RM5.85) which dates back to January this year. The breakdown of the uptrend line means that the continued uptrend for GenM has ended and the next phrase of price movement will be either a sideways movement or a downtrend (or a combination of both). GenM has in fact been moving sideways between RM5.60 & RM5.80 for the past 9-10 days.

Chart 1: GenM's daily chart as at Jun 13, 2017 (Source: Shareinvestor.com)

If you look at GenM’s monthly chart, you will see that it has been rising in an upward channel since 1998. During this 18-year period, GenM has touched the upper line thrice and the lower line thrice. Whenever these happened, the share price would move back into the middle of the channel. In May, GenM touched the upper line at RM6.40. Based on previous experience, GenM is likely to move towards the middle of the upward channel.

Chart 2: GenM's monthly chart as at Jun 13, 2017 (Source: Shareinvestor.com) 

I believe that investors should sell or reduce their position in GenM based on the following

1) the breakdown of the intermediate uptrend line at RM5.85; thus ending the immediate prospects of higher prices, and

2) the recent test of the upper line of the upward channel at RM6.40, which is likely to be followed by a price pullback to the middle of the upward channel.

If you choose to sell or reduce your position in GenM, the best price obtainable is RM5.70-5.80.

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.

BJTOTO: A Value Gaming Stock

The hefty tax penalty levied by the Inland Revenue against Magnum has caused investors with BJToto to sell-off their BJToto shares in order to avoid a similar debacle happening in BJToto or simply to swap their BJToto shares for much-cheaper Magnum shares. Is BJToto less attractive as compared to Magnum? Is BJToto worth considering for long-term investment?

Result Update

For QE31/1/2017, BJToto's net profit dropped 23% q-o-q or 18% y-o-y to RM48 million while revenue was mixed - down 6% q-o-q but up 3% y-o-y - to RM1.367 billion. Overall revenue dropped q-o-q mainly due to lower revenue reported by H.R. Owen and International Lottery & Totalizator Systems, Inc (the latter was due to recognition of substantial project contract sales). These were partly mitigated by higher revenue recorded by Sports Toto and Philippine Gaming Management Corporation. As a result of a drop in revenue, the Group's pre-tax profit declined by 9.6% q-o-q. (Note: BJToto's latest result is for QE31/1/2017 which was released on March 16, 2017. Next quarterly result is for QE30/4/2017 and that should be released next week.)


Table : BJToto's last 8 quarterly results

Revenue jumped in QE31/1/2014 due to the consolidation of H.R. Owen's revenue onto the Group's account. Despite the sharply higher revenue, the Group's bottom-line remained flat as the H.R. Owen's profits were not significant.


Graph: BJToto's last 14 quarterly results

Financial Position

BJToto's finaial position as at 31/1/2017 is deemed adequate, with current ratio at 1.05x gearing ratio at 2.19x.

Valuation

BJToto (closed at RM2.56 last Friday) is now trading at a PER of 12.6 times (based on last 4 quarters' EPS of 20.3 sen). Its dividend payment for the preceding 4 quarters amounted to 16 sen; giving the stock a dividend yield of 6.2%. At these PER & DY, BJToto is deemed fairly attractive.

Technical Outlook

BJToto has been sliding for the past 4 years from RM4.00 in mid-2013 to the current price of around RM2.50.


Chart 1: BJToto's monthly chart as at Jun 13, 2017_10.00 (Source: ShareInvestor.com)

BJToto's latest selldown happened after the stock broke below the horizontal line at RM2.90. At the current price level of RM2.50, BJToto appears to have found buying support.


Chart 2: BJToto's weekly chart as at Jun 13, 2017_10.00 (Source: ShareInvestor.com)

Conclusion

Based on its lower price, BJToto is once again trading at fairly attractive valuation. Despite the negative technical outlook, BJToto is a stock worth considering for long-term investment at this beaten down price.

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.