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.
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