APM: Earnings Remained Weak

Result Update

For QE31/12/2017, APM's net profit increased by 1% q-o-q but dropped 15% y-o-y to RM13 million while revenue increased by 12% q-o-q but dropped 4% y-o-y to RM328 million.  Revenue rose  q-o-q due to higher sale of OEMs parts in the Interior & Plastic Division, primarily driven by the new model launches in 3rd quarter of 2017. PBT rose 7.6% q-o-q due to improved performance recorded mainly in the Interior & Plastics Division, augmented by recognition of fair value gain on investment properties of RM4.7 million.

Profit after tax rose 23% q-o-q due to prior year deferred tax credit recognized in QE31/12/2017 while net profit rose marginally by 1% as non-controlling interests' share of net profit rose to RM5.959 million from RM3.159 million in QE30/9/2017.

Note: The latest result was released on February 28, 2018.


Table: APM's last 8 quarterly results


Chart: APM's last 39 quarterly results

Financial Position

APM's financial position as at 31/12/2017 is deemed healthy with current ratio at 2.94 times and total equity to total liabilities at 0.28 times. Its net cash is substantial at RM196 million or equivalent to RM0.84 per share.

Valuation

APM (closed at RM3.45 last Friday) is now trading at a PE of 17.3 times (based on last 4 quarters' EPS of 19.99 sen). If the net cash of 84 sen were deducted, APM would have a PER of 13.0 times. As the company is beginning to recover from weak automotive sales, there is good prospect of higher earning and improved PER.

Technical Outlook

APM is in a downtrend for the past 4 years. It is now resting on the strong horizontal line at RM3.50.


Chart: APM's monthly chart as at Mar 16, 2018 (Source: Shareinvestor.com)

Conclusion

Based on improved financial performance, healthy financial position & reasonably attractive valuation, APM is deemed a 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.