Peterlabs Holdings Berhad - Long Term Value Stock Results Update (Q1 FY21)

I was worried coming into Peterlabs (Plabs) results announcement for this quarter because the share price fell from a high of 31 sens back to where it was 1 month ago at 23 sens. Thankfully, it was a a positive surprise. The results came largely in line with my expectations when I first highlighted Peterlabs back on 10th December 2020. I also wrote an update piece here. The reason why I highlighted this company was because I noticed the re-rating catalyst following their acquisition of Thye On Thong, the established FMCG distributor.

Indeed, the revenue for Peterlabs came in very strong as the recognition commences from this quarter onwards. It would be the same moving forward. It is more than 120% increase topline YoY and 158% QoQ. The only thing now Peterlabs need to do is to try to bring down the cost of business to a reasonable level to ensure the profits will increase therefore allowing distribution back to shareholders. I believe the management will get a hang of it in time.

The not-so-good aspects would be the weaker earnings (profit margin) relative to the revenue and also the weaker balance sheet (albeit still net cash). That is likely due to the business needs of Thye On Tong. Receivables are higher too and it is the issue of FMCG business model. All in all, Peterlabs is moving in the direction that I expected. 

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