Petdag: Earnings Soared

Result Update

For QE30/9/2017, Petdag's net profit increased 210% q-o-q or 206% y-o-y to RM762 million while revenue rose 3% q-o-q or 22% y-o-y to RM6.694 billion. Revenue rose q-o-q mainly due to higher sales volume by 7%, offset by a decrease in average selling price by 3%.

Group operating profit rose by RM131.8 million mainly due to:

• improved margin of RM151.4 million from Mogas in line with the increasing MOPS price trend during the quarter; and
• higher other income of RM4.1 million mainly from Mesra income.

This was partially offset by higher operating expenditure by RM24.5 million attributable to increase in salaries, wages and benefits.

Group net profit jumped due to an extraordinary gain of RM424.6 million from the disposal of 100% equity interest in a subsidiary, PETRONAS Energy Philippines, Inc and 40% equity interest in an associated company, Duta Inc to P-H-O-E-N-I-X Petroleum Philippines, Inc., an external party of the Group for a fair value consideration of RM560.5 million.

Table: Petdag's last 8 quarterly results

 
Graph: Petdag's last 38 quarterly results

Valuation

Petdag (closed at RM21.60 last Friday) is now trading at a trailing PE of 19.6 times (based on last 4 quarters' estimated recurring EPS of 110 sen). Its dividend yield is decent at 3.6%. Overall, Petadg is deemed fairly attractive.

Technical Outlook

Over the past 2 weeks, Petdag has tumbled down to its intermediate uptrend line, S1-S1 support of RM21.50. If this support failed, Petdag may slide further to the psychological RM20.00 mark or even the long-term uptrend line, SS support at RM19.00.


Chart 1: Petdag's monthly chart as at Nov 10. 2017(Source: Malaysiastock.biz)


Chart 2: Petdag's daily chart as at Nov 10. 2017(Source: Malaysiastock.biz)

Conclusion

Based the improved financial performance and positive long-term technical outlook , I revised my rating for Petdag from HOLD to a BUY.

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.