Orna: Earnings Soared

Background

Ornapaper Bhd ('Orna') is involved in the production of corrugated boxes and carton boxes. Its current capacity is 84,000 MT per annum.

Historical Financial Performance

Orna's top-line and bottom-line jumped in FY2017. The company attributed the increased revenue to due to higher sale orders received and higher average selling price. This led to improvement in its bottom-line.


Table 1: Orna's last 9 years' financial performance


Graph 1: Orna's last 9 years' financial performance

Latest Financial Performance

In QE31/12/2017. Orna's net profit rose 43% q-o-q or 2-fold y-o-y to RM5.0 million while revenue rose 5% q-o-q or 27% y-o-y to RM90.8 million. Revenue rose q-o-q due to 6.6%-increase in sales volume and 19.0%-increase in average selling price for corrugated cartons and boards. In line with the increase in revenue, profit before tax increased from RM1.5 million in the corresponding quarter to RM6.1 million in the current quarter.


Table 2: Orna's last 8 quarters' financial performance


Graph 2: Orna's last 8 quarters' financial performance

Latest Financial Position

Orna's financial position as at 31/12/2017 is deemed healthy with current ratio at 1.6 times and gearing ratio at 0.7 times.

Valuation

Orna (cloased at RM1.63 in the morning session) is now trading at a trailing PER of 7.7 times (based on last 4 quarters' EPS of 21.1 sen). At this PER, Orna is deemed fairly attractive.

Technical Outlook

Orna rallied to an intra-day high of RM1.73 today before it corrected back to around RM1.60. On Feb 28, it also rallied to a significant high of RM1.70 before correction kicked in and brought the share price back to RM1.60 level. An upside breakout of RM1.70 may signal the continuation of the uptrend for this stock.


Chart 1: Orna's daily chart as at Mar 2, 2018 (Source: Shareinvestor.com)


Chart 2: Orna's monthly chart as at Mar 2, 2018 (Source: Shareinvestor.com)

Conclusion

Based on good financial performance & position, fairly attractive valuation and mildly positive technical outlook, Orna could be a good stock for medium-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.