Latitud: Earnings Continued to Rise

Result Update

In QE31/12/2018, Latitud's net profit rose 28% q-o-q or 120% y-o-y to RM17 million while revenue was mixed- down 5% q-o-q but rose 4% y-o-y to RM204 million. Revenue rose y-o-y mainly due to better orders received by furniture plants amounting to USD3.8 million offset with weakening of USD against RM. PBT rose y-o-y mainly due to increase in gross profit and foreign exchange gain of RM2.0 million in Q2FY2019 compared to foreign exchange loss of RM3.8 million in Q2FY2018.


Table: Latitud's 8 quarterly results


Graph: Latitud's P&L  for last 54 quarterly results

Financial Position

As at 31/12/2018, Latitud's financial position is deemed healthy with current ratio at 2.5x and gearing ratio at 0.4x.

Valuation

Latitud (closed at RM3.87 yesterday) is now trading at a trailing PER of 19 times (based on last 4 quarters' EPS of 20 sen). If the exceptionally poor result for QE30/6/2018 were excluded, Latitud's full-year EPS could be 33 sen, and its PER would be raised to 12 times. Based on this adjusted PER, Latitud is deemed fairly priced. 

Technical Outlook

Latitud has been in a s downtrend line, RR since 2015. It has just broken above the downtrend line. Its immediate resistance is at RM3.90-4.00.

Chart: Latitud's weekly chart as at Feb 27, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance and position and fair valuation, Latitud 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.