Zhulian: Earnings Soared

Result Update

In QE31/5/2019, Zhulian's net profit rose 81% q-o-q or 62% y-o-y to RM19.5 million while its revenue rose 33% q-o-q or 19% y-o-y to RM52 million. Revenue rose y-o-y mainly attributable to higher sales both locally and in Thailand. Profit before tax rose y-o-y mainly attributable to higher sales with diligent cost control and higher share of profit from an associate.


Table: Zhulian's last 8 quarters' results


Graph: Zhulian's last 51 quarters' results

Financial Position

Zhulian's financial position as at 31/5/2019 is deemed healthy with current ratio at 6.1x and gearing ratio at 0.07x. It has no borrowing but cash in hand of RM159 million (or, 35 sen per share).

Valuation

Zhulian (closed at RM1.44 yesterday) is now trading at a trailing PER of 10.8x (based on last 4 quarters' EPS of 13.39 sen). If the cash in hand is deducted from share price, Zhulian's PER will be reduced to 8.1x only. In addition, Zhulian paid dividend of 10 sen last 4 quarters, which translates to a dividend yield of 6.9%.

Technical Outlook

Zhulian is trading in a range of RM1.35 & RM1.45 over the past 3-4 months. There is no sign that the sideways movement is likely to change in the near term.


Chart 1: Zhulian's weekly chart as atJul 17, 2019 (Source: Malaysiastock.biz)


Chart 2: Zhulian's monthly chart as atJul 17, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance, satisfactory financial position and fairly attractive valuation, Zhulian could be a good income 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.