Results Update
For QE31/7/2016, Pohuat's net profit rebounded back & rose 158% q-o-q but dropped 6% y-o-y to RM10 million while revenue rose 18% q-o-q or 12% y-o-y to RM126 million. Revenue rose q-o-q following the lower level of production during the Tet/Chinese New Year Holiday which fell in the month of February (in Vietnam where 66% of its operation is based). The improvement in profitability was the result of the higher plant utilization rate.
Pohuat expected a satisfactory performance for FY2017 as per its comment:
All round improvement in economic sentiments and business confidence amongst our customers, coupled with the continued strength of the US Dollars, suggest better purchasing power and sustained demand for the Group’s products. The recent completion and commission of our reconstructed finishing line cum warehouse facilities in Binh Duong, Vietnam has added 20% to the capacity of the Binh Duong plant and more importantly enhanced our manufacturing capabilities and efficiency. Consistent with our efforts to move up the value of its products, the modernised finishing line will enable us to take on higher range products which cwill contribute more meaningfully to the Group’s bottom-line from FY2017 onwards.
Table 1: Pohuat's last 8 quarterly results
Chart 1: Pohuat's last 39 quarterly results
Valuation
Pohuat (closed at RM1.53 yesterday) is now trading at a trailing gross PER of 7.4 times (based on last 4 quarters' EPS of 20.55 sen). At this PER, the stock is fairly attractive. In addition, the stock pays a decent dividend of 8 sen last 4 quarter which translates to a Dividend Yield of 5.2%.
Technical Outlook
Pohuat's uptrend, SS accelerated into S1-S1 in late 2014. That accelerated uptrend line broke in Mar 2016 and is now acting a resistance to any rally. Meanwhile a rising line, AB is acting as a support for the stock. Thus, Pohuat has support from the line, AB at RM1.50 & its rebound is capped by the old uptrend line, S1-S1 at RM1.80.
Chart 2: Pohuat's weekly chart as at Sep 26, 2016 (Source: Chartnexus)
Conclusion
Based on good financial performance and fairly attractive valuation, Pohuat is a good stock for medium-term investment.
Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Pohuat.
POHUAT (7088) - Pohuat: Earnings Recovered
http://nexttrade.blogspot.my/2016/09/pohuat-earnings-recovered.html
