Tasek: Darkest Before Dawn?

Results Update

For QE31/3/2019, Tasek's net loss rose 55% q-o-q and 135% y-o-y to RM10.4 million while revenue was flat- up 1.7% q-o-q or 0.7% y-o-y to RM137 million. Revenue rose marginally q-o-q due to higher sales volume in both the cement and ready-mixed concrete segments. However the prolonged intense pricing competition continued to affect the contribution margin of both the cement and ready-mixed concrete segments last quarter. Lower interest income resulting from lower fund placements in term deposits also affected the Group's performance last quarter.


Table: Tasek's last 8 quarterly results

  
Graph: Tasek's last 44 quarterly results & dividend payout 

Financial Position

As at 31/3/2019, Tasek's financial position is deemed healthy with current ratio at 2.8 times and gearing ratio at 0.25 time.

Valuation

Tasek (closed at RM6.12 yesterday) is now trading a Price to Book of 1.4 times. We can't compute the PER as the company reported a loss per share of 22.96 sen. Due to the hefty losses, Tasek has cancelled its dividend in last year.

Technical Outlook

Tasek rebounded off its low of RM4.02 in December last year and went into a gradual rally over the past 4 months. Last 2 weeks, the rally picked up pace and the share price hit a high of RM6.80 on April 25. With the substantial losses for last quarter, Tasek will likely correct further next few weeks. Immediate support will be at the 200-day SMA line at RM5.60.


Chart 1: Tasek's daily chart as at Apr 30, 2019 (Source: Malaysiastock.biz)


Chart 2: Tasek's monthly chart as at Apr 30, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on poorer financial performance, demanding valuation and challenging operating environment, I am keeping my rating for Tasek to a SELL.

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.