Kianjoo: Earning Dropped Sharply

Result Update

For QE30/9/2017, Kianjoo's net profit dropped by 37% q-o-q or 81% y-o-y to RM9.5 million while revenue increased by 7% q-o-q or 12% y-o-y to RM472 million. Profit before taxation decreased from RM18.9 million in QE30/6/2017 to RM13.8 million in QE30/9/2017 due to lower PBT for both the Can & Trading divisions which declined by RM7.7 million & RM0.9 million respectively while the Cartons division reported higher loss before tax of RM4.2 million as compared to RM3.9 million in QE30/6/2017. The Cartons division, which is undertaken by Boxpak, has started a new factory in Myanmar which is expected to incur losses in the remaining quarter of the year due to pre-operating cost incurred.


Table: Kianjoo's last 8 quarterly results


Graph: Kianjoo's last 44 quarterly results

Valuation

Kianjoo (closed at RM3.01 last Friday) is now trading at a PE of 19 times (based on last 4 quarters' EPS of 15.65 sen). At this multiple, Kianjoo is deemed fully valued.

Technical Outlook

Kianjoo is in a long-term uptrend line with support at RM3.00. A break below this uptrend line - which is also an important psychological level - could signal a reversal of its gradual uptrend that stretches back to 2010.


Chart 1: Kianjoo's monthly chart as at Nov 24, 2017 (Source: Malaysiastock.biz)


Chart 2: Kianjoo's daily chart as at Nov 24, 2017 (Source: Malaysiastock.biz)

Conclusion

Despite weaker financial performance and full valuation, I maintain my rating for Kianjoo a HOLD as it is still trading above its uptrend 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.