Results Update

WTHorse has just announced its results for QE31/3/2010. The first calender quarter is usually a quiet period due to the slow construction activities during the long lunar new year break. This is reflected in the q-o-q decline in turnover & net profit by 15% & 44%, respectively. However, its net profit increased by 40% y-o-y on the back of a 14%-increase in turnover.


Table 1: WTHorse's last 8 quarterly results


Chart 1: WTHorse's 19 quarterly results

Valuation

WTHorse (closed at RM1.54 yesterday) is trading at a PER of 5.5 times (based on last 4 quarters' EPS of 28 sen). At this multiple, WTHorse is deemed inexpensive. If we were to value it at a PER of 8 times, its fair value could be about RM2.24.

Technical Outlook

WTHorse broke above its long-term downtrend line at RM1.05 in January 2009. The 20-week SMA line (presently at RM1.46) is a good proxy for a medium-term uptrend line for the stock. Immediate resistance is at RM1.70 & then RM1.88-90.


Chart 2: WTHorse's weekly chart as at May 12, 2010 (Source: Quickcharts)

Conclusion

Based on good financial performance, attractive valuation & good technical outlook, WTHorse is still rated a HOLD.