DLADY (3026) - DLady: Earnings dropped sharply




Result Update

For QE31/3/2015, DLady's net profit dropped by 50% q-o-q or 26% y-o-y to RM17 million while its revenue dropped by 25% q-o-q or 14% y-o-y to RM197 million. Revenue dropped q-o-q due to the phasing in of the relaunch of Dutch Lady Children Formula Milk. Additionally, in the immediate preceding quarter, higher sales of UHT was due to the seeding-in of the PureFarm range and strong sales of Dutch Lady Growing Up Milk to support “Mak Kata” promotion campaign. Profit before tax in Q1 2015 was lower compared to the preceding quarter due to the lower revenue


Table: DLady's last 8 quarterly results


Chart 1: DLady's last 28 quarterly results

Valuation

DLady (closed at RM46.80 yesterday) is now trading at a PE of 29 times (based on last 4 quarters' EPS of 162 sen). At this PE, DLady is deemed fully valued. Nevertheless, the DY of 4.7% will continue to be its strongest attraction.

Technical Outlook

Since October 2012, DLady has been moving sideways around RM46-48. Its indicators gave mixed reading, with monthly MACD hooked down & Slow Stochastic at the 50-mark. A breakout of the trading range of RM46-48 will point the way forward for the stock.


Chart 2: DLady's weekly chart as at May 26, 2015 (Source: Share Investor)

Conclusion

Based on poorer financial performance, demanding valuation & technical weakness, I would rate DLady as a REDUCE.

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, DLady.

DLADY (3026) - DLady: Earnings dropped sharply

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