Petdag: Earnings Soared

Result Update

For QE30/9/2017, Petdag's net profit increased 210% q-o-q or 206% y-o-y to RM762 million while revenue rose 3% q-o-q or 22% y-o-y to RM6.694 billion. Revenue rose q-o-q mainly due to higher sales volume by 7%, offset by a decrease in average selling price by 3%.

Group operating profit rose by RM131.8 million mainly due to:

• improved margin of RM151.4 million from Mogas in line with the increasing MOPS price trend during the quarter; and
• higher other income of RM4.1 million mainly from Mesra income.

This was partially offset by higher operating expenditure by RM24.5 million attributable to increase in salaries, wages and benefits.

Group net profit jumped due to an extraordinary gain of RM424.6 million from the disposal of 100% equity interest in a subsidiary, PETRONAS Energy Philippines, Inc and 40% equity interest in an associated company, Duta Inc to P-H-O-E-N-I-X Petroleum Philippines, Inc., an external party of the Group for a fair value consideration of RM560.5 million.

Table: Petdag's last 8 quarterly results

 
Graph: Petdag's last 38 quarterly results

Valuation

Petdag (closed at RM21.60 last Friday) is now trading at a trailing PE of 19.6 times (based on last 4 quarters' estimated recurring EPS of 110 sen). Its dividend yield is decent at 3.6%. Overall, Petadg is deemed fairly attractive.

Technical Outlook

Over the past 2 weeks, Petdag has tumbled down to its intermediate uptrend line, S1-S1 support of RM21.50. If this support failed, Petdag may slide further to the psychological RM20.00 mark or even the long-term uptrend line, SS support at RM19.00.


Chart 1: Petdag's monthly chart as at Nov 10. 2017(Source: Malaysiastock.biz)


Chart 2: Petdag's daily chart as at Nov 10. 2017(Source: Malaysiastock.biz)

Conclusion

Based the improved financial performance and positive long-term technical outlook , I revised my rating for Petdag from HOLD to a BUY.

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.

Petdag: Earnings Improved

Result Update

For QE31/3/2016, Petdag's net profit increased 138% q-o-q or 7% y-o-y to RM219 million while revenue dropped 18% q-o-q or 19% y-o-y to RM4.93 billion. Revenue dropped q-o-q as a result of a 21%-decline in average selling prices. Operating profit rose by RM164.5 million q-o-q due to lower opex (by RM107.1 million) & higher gross profit (by RM64.2 million). Opex dropped due to lower repair & maintenance & lower manpower expenses (from lower yearly bonus payment!). Higher gross profit was a result of increased sales volume in Retail & Commercial segments and higher margin in Retail.

Table: Petdag's last 8 quarterly results

 
Chart 1: Petdag's last 32 quarterly results

Valuation

Petdag (closed at RM22.70 yesterday) is now trading at a trailing PE of 28 times (based on last 4 quarters' EPS of 80.9 sen). Based on this PER multiple, Petdag is fully valued.However, its earnings rose by 46% last 4 quarters (after a drop of 24% in the preceding 4 quarters). If it can grow at 30%, the stock is fairly valued. I doubt it can do so in the current global economic environment.

Technical Outlook

Petdag broke its intermediator uptrend line, SS at RM24 in March. It may trade sideways at either the immediate horizontal line at RM22 or the next one at RM19. However, it is still above its long-term uptrend line support at RM20. See Chart 3.


Chart 2: Petdag's weekly chart as at May 11, 2016 (Source: ShareInvestor.com)


Chart 3: Petdag's monthly chart as at May 11, 2016 (Source: ShareInvestor.com)

Conclusion

Based the improved financial performance and positive long-term technical outlook , I maintain my rating for Petdag as a HOLD. Investors will have to live with its high valuation & the mildly negative medium-term outlook for now.

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, Petdag.