Friday, 6 May 2016

Comcorp (4) - Excellent, Excellent Results

Author: Icon8888   |   Publish date: Thu, 24 Mar 2016, 08:25 PM 

Comcorp released its January 2016 quarterly result this evening. The result is excellent. Please refer to table below, which is self explanatory.



Note : if I am not wrong, the latest quarterly report posted by Comcorp on Bursa is not complete. As such, I am not able to determine whether the latest quarter contains any exceptional items. I will update this article once it is made available

Since I wrote about Comcorp in December 2015, one of the most frequent heard complains was that Comcorp's electronic manufacturing division relied purely on strong USD to survive. 

My study showed a different picture. Comcorp's electronic manufacturing division has been producing EBIT of approximately RM4.2 mil even when Ringgit was as strong as 3.468 per USD (please refer to January 2015 quarter figures in table above).

After deducting RM0.5 mil interest expense and assume zero tax, quarterly net profit is approximately RM3.7 mil per quarter, or EPS of 2.6 sen. If annualised, full year EPS could be as high as 10 sen (even with exchange rate at 3.468).

The reason why Comcorp has not been perfoming well in the past is because of losses incurred by the IT division. In the latest quarter, this division has broken even. Can the IT division continue to break even going forward ? Nobody knows. But my point is that Comcorp's manufacturing division is more resilient than many people think.

This stock would have fly if not because of recent strengthening of Ringgit. Even though my view is that strong USD should last for few more years, if you are uncomfortable with the prospects of export sector, you should consider taking the opportunity to trim your position tomorrow. 

As for me, I will just dumb dumd hold.

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