Waseong: Earning Jumped

Results Update

For QE30/9/2017, Waseong's net profit rose 241% q-o-q on the back of a 68%-rise in revenue to RM750 million. Waseong returned to profitability last quarter as compared to a loss before tax of RM23 million in QE30/9/2016.

The Group's PBT rose y-o-y due to sharp rise in revenue & PBT from the O&G segment as a result of the commencement of full execution of several significant projects. The Industrial & Services segment reported a lower loss before tax due to higher revenue as a result of higher sales from trading of building material. The Renewable Energy segment reported a lower PBT due to lower revenue while Plantation segment reported a loss before tax as compared to a profit before tax previously due to slowdown in plantation activities. The positive variance in the O&G segment had more than offset the negative variance in the other segments.


Table: Waseong's last 8 quarterly results


Graph: Waseong's last 24 quarterly results

Financial Position

As at 30/9/2017, Waseong's financial position is deemed marginal with fairly tight liquidity position as reflected by the current ratio at 1.0x and elevated leverage position based on gearing ratio at 2.4x.

Technical Outlook

Waseong broke above the rising wedge at RM1.05 in November 9. Its next resistance will be from the horizontal line at RM1.40 & then the long-term downtrend line at RM1.50.


Chart 1: Waseong's daily chart as at Nov 29, 2017 (Source: Malaysiastock.biz)

Chart 2: Waseong's weekly chart as at Nov 29, 2017 (Source: Malaysiastock.biz)

Valuation

Waseong (closed at RM1.20 yesterday) is trading at a PE of 15 times (based on annualized EPS of 8 sen). Though the PER is on the high side, Waseong's earning is likely to improve with the increased activity from the O&G segment.

Conclusion

Based on improved financial performance & exciting prospect, Waseong is a good stock to long-term investment. Good entry is at RM1.05-1.10.

For more on Waseong, please check out my earlier post.

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.