For QE30/6/2014, Vitrox's net profit soared 4-fold q-o-q or 2-fold y-o-y to RM20.0 million. At the same time, revenue jumped 185% q-o-q or 130% y-o-y to RM65 million. The q-o-q increase in revenue and profit were attributed to increase in sales recorded for MVS, ABI and ECS. Sales from MVS, ABI and ECS have recoded an increase of 263%, 137% and 50% respectively against the immediate preceding quarter. The strong growth was due to improving outlook for the semiconductor and electronics industries. While it is encouraging to note that the strongest growth came from MVS - the product with the highest profit margin - the sales came from a single customer. This gives rise to concern about concentration risk.
Table: Vitrox's last 8 quarterly results
Chart 1: Vitrox's last 27 quarterly results
Chart 2: Vitrox's last 9 years' results
Valuation
Vitrox (closed at RM2.80 on August 22) is now trading at a PE of 16 times (based on last 4 quarters' EPS of 18 sen). At this PE multiple, Vitrox is deemed fairly valued.
Technical Outlook
Vitrox is in an uptrend. If it can surpass the RM2.75, the uptrend may continue.
Chart 2: Vitrox's weekly chart as at Aug 22, 2014 (Source: Tradesignum)
Chart 3: Vitrox's monthly chart August 2014 (Source: Chartnexus)
Conclusion
Based on improving financial performance & bullish technical outlook, Vitrox is a good stock forlong term investment.
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,Vitrox.
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