For QE30/9/2019, F&N's net profit dropped 41% q-o-q or 16% y-o-y to RM68 million while revenue dropped 8.6% q-o-q or 2.2% y-o-y to RM975 million. Both F&B Malaysia and F&B Thailand revenue declined by 12.8% to RM498.3 million and 3.7% (-6.6% in local currency) to RM475.5 million, respectively. F&B Malaysia revenue dropped mainly due to slower off-take in current quarter post Hari Raya Puasa festive season and pre-loading effect ahead of sugar tax implementation.
F&B Malaysia operating profit declined by 47.5% to RM27.7 million due to lower trade and marketing spending in the preceding quarter. At the same time, F&B Thailand operating profit declined by 38.9% (-42.1% in local currency) to RM60.6 million mainly due to higher investment in brand spending and new product launches and re-launches in the current quarter.
Table: F&N's last 8 quarterly results
Graph: F&N's last 52 quarterly results
As at 30/9/2019, F&N's financial position is deemed healthy with current ratio at 2.21 times and gearing ratio at 0.39 time.
F&N (closed at RM35.06 yesterday) is now trading at a PER of 31 times (based on last 4 quarters' EPS of 111.9 sen). At this PER, F&N is deemed fully valued.
F&N is in an uptrend line, with support at RM32.50.
Chart 1: F&N's weekly chart as at Nov 5, 2019 (Source: Malaysiastock.biz)
Chart 2: F&N's monthly chart as at Nov 5, 2019 (Source: Malaysiastock.biz)
Despite weaker financial performance & high valuation, I rate F&N as a HOLD. The poorer result is a temporary and the technical outlook is still positive.
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