GCorp announced its results for 3Q2010 ended 31/10/2009. It reported a net profit of RM24.1 million- an increase of 62.2% when compared to the same quarter last year but a slight drop of 1.5% when compared to the immediate preceding quarter. Turnover was up 24.7% q-o-q or 224% y-o-y to RM521 million. GCorp continued to benefit from the development projects and overseas operations, via Low Keng Huat (Singapore) Limited.
Table: GCorp's 8 quarterly results
Chart 1: GCorp's last 11 quarterly results
Valuation
GCorp (closed at RM1.07 as at Dec 17) is now trading at a PE of 6.4 times (based on its last 4 quarters' EPS of 16.6 sen). I have stated previously that GCorp deserves to be valued at a higher PE multiple (say, 10-12 times) as it is a mid-size diversified group with a good growth track record. On second thought, I think GCorp - being mostly involved in property development & construction- should be valued at a PE of about 7-8 times. Based on a PE of 7.5 times, its fair value would be about RM1.25.
Technical Outlook
GCorp has surpassed its medium-term downtrend line at RM1.00 in June 2009. Nevertheless, the share price failed to charge higher. Its immediate resistance is at RM1.15-20 and thereafter at RM1.35-40.
Chart 2: GCorp's weekly chart as at Dec 21, 2009_3.35pm (Source: Quickcharts)
Conclusion
Based on continued strong financial performance & favorable technical outlook, GCorp could be a good stock for long-term investment. Its present upside may be limited if we pegged its fair value at RM1.25.
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