Liihen: Earnings Roared Back

Result Update

In QE31/12/2018, Liihen's net profit rose 41% q-o-q or 40% y-o-y to RM21.5 million while revenue rose 8% q-o-q or 17% y-o-y to RM217 million. Revenue in current period increased 8% compared to the immediate preceding quarter mainly due to the increase in export sales by 6.4% from USD 47 million to USD 50 million and slight appreciation of USD against RM by 2% (4th Qtr 2018 :4.16; 3 rd Qtr 2018: 4.08). With the operating cost maintained at relatively constant level and stronger USD compared to the immediate preceding quarter, the fourth quarter’s profit before tax increased 21%. The lower effective tax rate in the current quarter of 13% was due to certain export tax allowance claimed.


Table: Liihen's last 8 quarterly results


Graph: Liihen's last 25 quarterly results

Financial Position

As at 31/12/2018, Liihen's financial position is deemed healthy with current ratio at 2.4 times and total liabilities to total equity of 0.4 times. 

Valuation

Liihen (closed at RM2.83 yesterday) is now trading at a trailing PER of 8.8 times (based on last 4 quarters' EPS of 32 sen). Based on this, Liihen is deemed an attractive stock.

Technical Outlook

Liihen is hovering at the horizontal line at RM2.80 for the past 2 months. If it can surpass this resistance, it may go up to test the next horizontal line at RM3.30.


Chart: Liihen's weekly chart as at Feb 21, 2019 (Source: Malaysiastock.biz)

Conclusion

With improved financial performance, healthy financial position and attractive valuation, Liihen 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.