QE31/7/2020, NTPM's net profit rose 259% q-o-q or 28-fold y-o-y to
RM14.6 million while revenue dropped by 11% q-o-q or 3% y-o-y to RM179
million. Group revenue dropped y-o-y due to the decrease in sales of
Tissue paper products. The Group’s PBT increased 527% y-o-y mainly due
to the lower raw material cost and overhead cost. The key factors that
affect the performance of tissue products include the lower cost in raw
material consumed such as virgin pulp and waste paper.
NTPM's financial position as at 31//7/2020 is deemed adequate with current ratio at 0.96 time and total liabilities to total equity at 1.17 times.Valuation
NTPM (closed at RM0.63 yesterday) is now trading at a PE of 33.5 times (based on last 4 quarters' EPS of 1.88 sen). At this PER, NTPM is deemed overvalued.
NTPM broke above its long-term downtrend line, RR at RM0.40 in September 2019. Due to the sharp selldown in March, the stock revisited the downtrend line again at RM0.32. The 50-week SMA line could be a good support if NTPM share price comes under selling pressure. The breakout of the downtrend line, coupled with the recent upward movement, means that the worst is behind the stock and better days may be here.
Chart 2: NTPM's weekly chart as at Sep 28, 2020 (Source: Malaysiastock.biz)
Based on improved financial performance and mildly bullish technical outlook, NTPM could be a good stock for recovery play. Its upside potential is still limited due to demanding valuation.
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