For QE30/9/2017, F&N's net profit dropped 72% q-o-q or 60% y-o-y to RM20 million while revenue dropped by 6% q-o-q - but remained unchanged y-o-y - to RM976 million. Overall revenue dropped q-o-q due to lower revenue for F&B Malaysia revenue due to earlier sell-in for the 2017 Hari Raya Puasa festive season (which took place in the third quarter ended 30 June 2017) and intense price pressure from competitors but partly offset by higher exports as well as lower revenue for F&B Thailand revenue mainly due to higher trade spend and input costs. This led to lower profits and in the case of F&B Malaysia, even a small operating loss of RM11.5 million - undoubtedly aggravated by higher advertising and promotions spending, plus lower exports contribution.
Table: F&N's last 8 quarterly results
Graph: F&N's last 44 quarterly results
F&N (closed at RM25.44 yesterday) is now trading at a PE of 29 times (based on last 4 quarters' EPS of 88.3 sen). At this PE multiple, F&N is deemed overvalued.
F&N has limited upside due to the resistance from the horizontal line at RM25.50. it is likely that F&N will trade sideways for the next few quarters until earnings rise again.
Chart 1: F&N's weekly chart as at Nov 7. 2017(Source: Malaysiastock.biz)
Chart 2: F&N's monthly chart as at Nov 7. 2017(Source: Malaysiastock.biz)
Despite satisfactory financial performance, I rate F&N as a REDUCE due to demanding valuation.
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