CMSB: Earning Remained Stable

Results Update

For QE31/3/2019, CMSB's net profit dropped 29% q-o-q but rose 5% y-o-y to RM41 million while revenue was mixed, down 16% q-o-q but up 18% y-o-y to RM418 million. All Divisions except the Strategic Investment Division reported higher revenue in PE2019 compared to PE2018. The Strategic Investment Division reported higher losses in PE2019 due to higher losses from the education subsidiary and losses from Malaysian Phosphate Additives (S) Sdn. Bhd. (MPAS). Previously, MPAS was classified under associates.

However, all Divisions except the Construction & Road Maintenance Divisions reported higher profits in PE2019 due to higher revenue and gross profit margin. The higher gross profit margin was attributable to a land sale by the Property Development Division. However, this has been partially negated by lower share of results of associates and joint ventures.


Table: CMSB's last 8 quarters' P&L

Graph: CMSB's last 23 quarters' P&L

Valuation

CMSB (closed at RM3.30 yesterday) has a PER multiple of 13 times (based the last 4 quarters' EPS of 24.96 sen). At this PER, CMSB is deemed fairly attractive.

Technical Outlook

CMSB is moving in a downward channel, with resistance at RM3.60-3.70. Due to the presence of a rising intermediate uptrend line (within the downward channel), CMSB will have good support at RM3.00.


Chart: CMSB's weekly chart as at May 15, 2019(Source: Malaysiastock.biz)

Conclusion

Based on good financial performance, exciting prospect, fairly attractive valuation and positive technical outlook, CMSB could be 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.