Results Update
For QE30/6/2018, Pertim's net profit dropped 6% q-o-q but rose 328% y-o-y to RM12 million while revenue rose 2.4% q-o-q or 0.6% y-o-y to RM239 million. Revenue rose q-o-q due to higher sales volume coupled with higher selling price. The Group recorded a profit before tax of RM15.8 million compared with RM16.0 million in the Previous Quarter. The lower profit before tax was due to financial year adjustment in the Previous Quarter despite higher profit margin and higher sales volume in the Current Quarter.
Table: Perstim's last 8 quarterly P&L
Graph: Perstim's last 56 quarters' P&L
Valuation
Perstim (closed at RM4.84 yesterday) is now trading at a trailing PER of 15 times (based on last 4 quarters' EPS of 32.15 sen). If the last 2 quarterly earnings can be maintained for the next 2 quarters, then its full year EPS will be about 50 sen. That will lower its current year PER to 9.7 times- making the stock fairly attractive. In addition, Perstim has an attractive dividend payment record, with DY of 6.2%.
Technical Outlook
Perstim has broken above the strong horizontal resistance at RM4.50. This could signal the start of the next upleg for the stock.
Chart 1: Perstim's weekly chart as at July 31, 2018(Source: Shareinvestor.com)
In addition, Perstim had tested its long-term uptrend line at RM3.50, and that line is still intact.
Chart 2: Perstim's monthly chart as at July 31, 2018(Source: Shareinvestor.com)
Conclusion
Based on improved financial performance, attractive valuation and bullish technical outlook, I revise my rating for Perstim from a Sell 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.
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