Jaycorp: Profit Recovery Began

Background

Jaycorp Berhad ("Jaycorp") is involved in 6 business segments, namely rubberwood furniture, which is engaged in the manufacture and sale of rubberwood furniture; packaging, which is engaged in the conversion of corrugated boards into carton boxes; processing of rubberwood, which is engaged in pressure treatment and kiln-drying of rubberwood; general trading, which sells construction materials, renewable energy, and others, which is engaged in the provision of transportation services, property letting and printing. 

Diagram: Jaycorp's 6 business segments

Recent Financial Result 

For QE31/7/2018, Jacorp returned to the black as it reported a net profit of RM4.6 million as compared to a net loss of RM392k in the immediate preceding quarter.


 Table 1: Jaycorp's last 8 quarterly results

The improvement in the financial performance was due to overall better profits or turnaround in all segments, especially the Furniture segment.


Table 2: Jaycorp's segmental results for QE31/7/2018


Graph: Jaycorp's last 32 quarterly results

Financial Position

Financial position is deemed healthy with current ratio at 2.5 times and gearing ratio at 0.35 time.

Valuation

Jaycorp (closed at RM0.94 last Friday) is now trading at a PE of 12.5 times (based on last 4 quarters' EPS of 7.52 sen). At this multiple, Jaycorp is deemed fairly attractive.

Technical Outlook

Jaycorp is struggling to stay at its long-term uptrend line at RM0.90.


Chart : Jaycorp's weekly chart as at Sep 28, 2018 (Source: Malaysiastock.biz)

Conclusion

Based on the improved financial performance, healthy financial position and fairly attractive valuation, I consider 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.