Wednesday, October 31, 2012

Gtronic- bottom-line improved due to exceptional gain

Results Update

For QE30/9/2012, Gtronic's net profit rose by 46% q-o-q or 84% y-o-y to RM14.2 million while revenue increased by 13% q-o-q or 11% y-o-y to RM78.3 million. The increased revenue is attributed to higher loadings from its customers while increased net profit was attributed to better product mix, economy of scale & an exceptional gain of RM4.5 million on disposal of land & building in Jitra. If the exceptional gain is excluded, Gtronic's net profit would be RM9.7 million- unchanged when compared to the immediate preceding quarter (QE30/6/2012).


Table 1: Gtronic's last 8 quarterly results


Chart 1: Gtronic's last 22 quarterly results

Valuation

Gtronic (closed at RM1.50 yesterday) is now trading at a PE of 11.5 times (based on last 4 quarters' EPS of 13.1 sen). If the exceptional gain from the disposal of the Jitra property is excluded, the last 4 quarters' EPS would drop to 11.4 sen and the trailing PE would rise to 13.2 times. At this PE, Gtronic is deemed fairly valued.

Technical Outlook

Gtronic is in an intermediate uptrend since the beginning of the year. It has performed better than its bigger competitors- Unisem & MPI- both in term of financial performance as well as share price performance. The stock's immediate resistance is at the horizontal line at RM1.50 while its immediate support is at the horizontal line at RM1.35.


Chart 2: Gtronics weekly chart as at Oct 30, 2012 (Source: Quickcharts)

Conclusion

Based on good financial performance, Gtronic is a good stock for long-term investment. However, the valuation is no longer cheap and the stock's upside is capped by the horizontal resistance at RM1.50. As such, I would rate this stock a HOLD for now.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Gtronic.

1 comment:

Hk Wong said...

The successful execution of its proximity sensor product is another testimony of
Globe’s dynamic management team ability to identify new business opportunities
and penetrate new market segments. We continue to like the stock for its strong
earnings growth prospects (3-year CAGR of 22.7% over FY11-FY14) and its
highly attractive dividend yield (9.5% for FY13).