DUFU: 2Q Earnings Rebounded from 1Q Decline

Result Update

For Q30/6/2019, Dufu's net profit rose 151% q-o-q but dropped 11% y-o-y to RM10.5 million while revenue rose 8% q-o-q but dropped 9% y-o-y to RM53 million. Profit before taxation increased by RM7.7 million or 132% q-o-q mainly due to the increased in revenue, favorable foreign exchange rate and higher production output which has resulted in lower absorption fixed overhead costs in the current financial quarter as compared to the preceding quarter.


Table: Dufu's last 8 quarterly result


Graph: Dufu's last 24 quarterly result

Financial Position

Dufu's financial position as at 30/6/2019 is deemed healthy. Its current ratio and gearing ratio stood at 4.5 times and 0.3 times respectively.

Valuation

Dufu (closed at RM1.88 yesterday) is now trading at a trailing PER of 9.5x (based on last 4 quarters' EPS of 19.83 sen). At this PER, Dufu is deemed fairly attractive.

Technical Outlook

Dufu has been stange-bound between RM1.30 and RM1.95 for the past 7 months.


Chart 1: Dufu's daily chart as at Aug 7, 2019 (Source: Malaysiastock.biz)


Chart 2: Dufu's monthly chart as at Aug 7, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on better financial performance, healthy financial position and fairly attractive valuation, Dufu is still 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.