TCHONG: Earning Recovery Hasn't Begun Yet

Result Update

For QE30/6/2018, TChong's net profit increased by 190% q-o-q to RM12 million while revenue rose 5% q-o-q to RM1.088 billion. Revenue rose q-o-q mainly due to higher number of vehicles sold and EBITDA & net profit rose q-o-q due to improvement in the margins with the favourable sales mix.


Table: TChong's last 8 quarterly results

TChong's revenue, profits and profit margins appear to have turn the corner in the last few quarters.


Graph: TChong's last 47 quarterly results

Financial Position

As at 30/6/2018, TChong's financial position is deemed satisfactory with current ratio at 1.4 times and gearing ratio at 0.9 time.

Valuation

TChong (closed at RM1.69 yesterday) is now trading at a PBR of 0.4 times (based on NTA of RM4.28 as at 30/6/2018). As the group has yet to make a profit on cumulative basis for the 4 quarters to 30/6/2018, TChong is unable to give out any PER.

Technical Outlook

TChong appears to be making a base at around RM1.60.


Chart 1: TChong's monthly chart as at Aug 14, 2018 (Source: ShareInvestor.com)


Chart 2: TChong's weekly chart as at Aug 14, 2018 (Source: ShareInvestor.com)

Conclusion

Based on improved financial performance & adequate financial position, TChong could be a good stock for recovery play.

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.