Muda: A Surprisingly Strong 3Q

Results Update

For QE30/9/2018, Muda's net profit rose 118% q-o-q or 47-fold y-o-y to RM25 million while its revenue rose 8% q-o-q & y-o-y to RM381 million. Revenue rose mainly due to improvement in selling prices for industrial paper and paper packaging products. Compared to the corresponding quarter in previous year, higher segment profit in current quarter is mainly attributable to improvement in the selling prices and lower production cost in the Manufacturing Division with minor segment margin improvement in the Trading Division.


Table: Muda's last 8 quarterly results


Graph: Muda's last 50 quarterly results
 
Financial Position

Muda's financial position is deemed adequate with current ratio at 1.1 times and total liabilities to total equity at 0.9 time.

Valuation

Muda (trading at RM2.12 as at 3.15pm) is trading at a PE of 10.1 times (based on last 4 quarters' EPS of 20.88 sen). At this PER, Muda is deemed fairly attractive.

Technical Outlook

Mudahas been trading sideways for the past 6 months between RM1.50 & RM2.20. If it can break above RM2.20 (on the back of the current good performance), it may charge up to the May high of RM2.86-2.90.


Chart 1: Muda's daily chart as at Nov 23, 2018_2.50pm (Source: Malaysiastock.biz)

Looking at the monthly chart, Muda has strong resistance at RM2.35-2.50.


Chart 2: Muda's monthly chart as at Nov 23, 2018_2.50pm (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance and attractive valuation, Muda is 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.