GCB: Earnings Continued to Rise

Results Update

For QE30/6/2019, GCB's net profit rose 15% q-o-q or 42% y-o-y to RM61 million while revenue rose 16% q-o-q or 53% y-o-y to RM753 million. Revenue increased y-o-y mainly due to increase in sales volume of cocoa products while profit before tax rose 42% y-o-y mainly due to higher sales volume achieved.


Table: GCB's last 8 quarterly results


Graph: GCB's last 59 quarterly results

Financial Position

As at 30/6/2019, GCB's financial position is deemed fair while current ratio at 1.4 times and gearing ratio at 1.3 times. The high gearing was due to the suppliers' credit taken to finance purchase of raw material.

Valuation

GCB (closed at RM3.53 yesterday) is now trading at a trailing PER of 7.6 times (based on last 4 quarters' EPS of 46.3 sen). At this PER, GCB is deemed fairly attractive.

Technical Outlook

GCB made a temporary top in April at RM4.24. It then dropped back to find support at the horizontal line at RM3.30. The next support will be from the uptrend line, SS at RM3.10.


Chart : GCB's weekly chart as at Aug 19, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance, attractive valuation and positive technical outlook, GCB 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.