ORIENT (4006) - Orient: Back To The Black

ORIENT (4006) - Orient: Back To The Black

Results Update

For QE30/9/2016, Orient's net profit dropped 6% y-o-y to RM89 million on the back of a 15%-increase in revenue to RM1376 million. It has recovered from a net loss of RM12.6 million recorded in the immediate preceding quarter (QE30/6/2016) on the back of a 27%-increase in revenue.

Table 1: Orient's last 8 quarterly results

From the segmental table below, we can see that the loss in QE30/6/2016 & the recovery in the latest quarter, was due to the downturn & subsequent recovery in the automotive & plantation divisions. The changes are explained below:

  • Revenue from automotive segment grew by 46.3% to RM 1,069.5 million and recorded higher operating profit by 121.2% to RM 55.8 million (Q2FY16: RM 25.3 million). Revenue for retail operating increased by 51.0% mainly due to higher number of cars sold particularly from newly launched of Honda Civic during this quarter. Higher operating profit recorded in line with higher revenue.
  • Revenue from plantation segment decreased by 20.3% (Q3FY16 : RM 85.4 million; Q2FY16 : RM 107.2 million) but recorded operating profit of RM 13.0 million (operating loss in Q2FY16 : RM 74.9 million). Due to El Nino effect on FFB yields, CPO and PK sales volume from Indonesian operations declined by 27.8% and 21.7% respectively as compared to Q2FY16. The segment managed to registered an operating profit due to lower foreign exchange loss for the JPY borrowings (weakened IDR against JPY (September16 : 0.1% ; June16 : 10.0%).

Table 2: Orient's segmental results compared

Graph 1: Orient's last 44 quarterly results


Orient (closed at RM6.81 at the end of the morning session) is now trading at a PE of 21 times (based on last 4 quarters' EPS of 32 sen). At this PER, Orient is deemed overvalued.

Technical Outlook

Orient has pulled back to its long-term uptrend curve-linear line with support at around RM6.50.

Chart 1: Orient's monthly chart as at Nov 18, 2016_12.30 (Source: Shareinvestor.com)

Chart 2: Orient's weekly chart as at Nov 18, 2016_12.30 (Source: Shareinvestor.com)


Based on return to profitability, Orient is deemed a good stock for a recovery play.

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ORIENT (4006) - Orient: Back To The Black