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Thursday, August 23, 2012

EForce- an attractive value stock

Results Update

For QE30/6/2012, EForce's net profit increased by 2% q-o-q or 36% y-o-y to RM2.1 million while revenue increased by 2% q-o-q or 20% y-o-y to RM5.0 million. The company's top-line and bottom-line jumped in that past 2 quarters as it secured more business from stockbrokers as a result of Bursa Malaysia's decision to discontinue its Broker Front End ('BFE') system.


Table: EForce's last 8 quarterly results


Chart 1: EForce's last 18 quarterly results

Financial position

As at 30/6/2012, EForce's financial position is deemed satisfactory. Its current ratio is at 9 times while gearing ratio is only 0.05 time. It has cash reserves of RM26.6 million or equivalent to 13 sen per share.

Valuation

EForce (closed at RM0.32 yesterday) is now trading at a PE of 9.4 times (based on last 4 quarters' EPS of 3.39 sen). If the cash backing per share of 13 sen is deducted from the share price, the PE is only 5.6 times.

Another Bonus Issue next year?

Since its listing at end 2004, EForce has issued 1-for-2 bonus issue twice- in August 2007 and October 2010. Will the company propose another bonus issue next year?

Technical Outlook

The stock has been hoovering around the RM0.30 level for the past 12 months. There is no sign of the next price direction.


Chart 2: EForce's monthly chart as at Aug 17, 2012 (Source: Tradesignum)

Conclusion

Based on good financial performance & position & attractive valuation, EForce is a good stock for long-term investment.

2 comments:

newbie said...

Dear Alex,
Could you kindly comment on the latest announcement by LIONFIB?Based on what has been written,an amount circa RM190 million that was placed in an escrow account has been approved by the SC for release.That amount,if we include the existing cash in hand of near RM178 million would potentially raise it's cash to nearly 1.58 per share!Granted that the recent earnings has not eye boggling,shouldn't the NTA of 5.22 be an attraction as well?Potential of returning any of it to shareholders,maybe?
Thanks in advance Alex.

khat said...

at abt 6%, dividend yield is satisfactory