ASTINO: Good Earnings in a Weak Market

Result Update

In QE30/4/2021, Astino's net profit rose 22% q-o-q or 447% y-o-y to RM22.8 million while its revenue dropped 11% q-o-q but rose 70% y-o-y to RM156 million. Revenue has decreased q-o-q primarily due to decrease in local market demand. Profit before taxation increased by RM8.9 million to RM29.8 million, due to higher selling prices and improved operating cost. In addition, the allowance for diminution in value of inventories was RM2.3 million lower than the immediate preceding quarter. (Note: Astino is essentially a building material producer. For more, go here).


Table: Astino's last 8 quarters' results


Graph: Astino's last 52 quarters' results

Financial Position

Astino's financial position as at 30/4/2021 is deemed healthy with current ratio at 5.56x and gearing ratio at 0.15x.

Valuation

Astino (closed at RM1.40 last Friday) is now trading at a trailing PER of 6.4x (based on last 4 quarters' EPS of 21.74 sen). At this PER, Astino is deemed fairly attractive.

Technical Outlook

Astino has rallied strongly off its March 2020 low of RM0.37 ti make a high of RM1.70 in May 2021.

Chart 1: Astino's weekly chart as at Jun 25, 2021 (Source: Malaysiastock.biz)

From the monthly chart, we can see that Astino  has been moving within a large expanding triangle since 2014. Until it can break above the upper line at RM1.60, Astino is likely to move within the triangle. Since it has just tested the upper line, the more likely move is downward notwithstanding the good financial results achieved.

Chart 2: Astino's monthly chart as at Jun 25, 2021  (Source: Kenanga's BTX)

Conclusion

Based on good financial performance & financial position and fairly attractive valuation, Astino is a good stock for long-term investment. The near-term upside potential is limited as the share price will face strong resistance from the upper line of the expanding triangle.  

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.