TChong: Earnings Rebounded Strongly26th February 2019
For QE31/12/2018, TChong’s net profit rose 57% q-o-q to RM52 million while revenue dropped 26% q-o-q to RM1.17 billion. The group revenue dropped q-o-q due to lower revenue from the automotive division of RM1,140.7 million (-26.0% QoQ) which was due to lower sales in the absence of the “tax holiday” in Malaysia in the previous quarter. Nonetheless, the group EBITDA rose due to higher EBITDA from the automotive division of RM114.6 million (+29.3% QoQ) due to the favourable sales mix and improved margins.
Table: TChong’s last 8 quarterly results
TChong’s revenue, profits and profit margins appear to have turn the corner in the last few quarters.
Graph: TChong’s last 49 quarterly results
As at 31/12/2018, TChong’s financial position is deemed satisfactory with current ratio at 1.6 times and gearing ratio at 0.9 time.
TChong (closed at RM1.48 yesterday) is now trading at a trailing PER of 9.5 times (based on last 4 quarters’ EPS of 15.48 sen). At this PER, TChong is deemed fairly attractive for a turnaround stock.
TChong appears to be making a base at around RM1.40.
Chart: TChong’s monthly chart as at Feb 25, 2019 (Source: Malaysiastock.biz)
Based on improved financial performance and healthy financial position, TChong could be a good stock for recovery play.
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