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Monday, August 08, 2016

Penta: Earnings Rose Sharply

Results Update

For QE30/6/2016, Penta's net profit increased by 110% q-o-q or 105% y-o-y to RM6.7 million while revenue dropped by 36% q-o-q or 61% y-o-y to RM39 million. Revenue increased q-o-q mainly due to increase in sales contribution from both automated equipment operating segment and smart control solution system segment which was partially offset by the lower revenue from automated manufacturing solution operating segment. Due to the higher revenue achieved and better product mix secured, profit before tax rose 102% q-o-q to RM8.6 million.
  

Table: Penta's last 14 quarterly results

Penta's quarterly revenue made new high. This also pushed its quarterly earnings to new high.

 
Chart 1: Penta's last 14 quarterly results 
 
Valuation

Penta (closed at RM1.00 last Friday) is now trading at a PER of 8.3 times (based on last 4 quarters' EPS of 12.1 sen). Based on strong growth of 84% last year, Penta's trailing PER of less than 10 times would make the stock looks fairly attractive.

Technical Outlook

Penta surpassed its 2015 high of RM0.92. It could continue in its uptrend and test the next resistance from the horizontal line at RM1.45.


Chart 2: Penta's weekly chart as at August 5, 2016 (Source: ShareInvestor)


Chart 3: Penta's monthly chart as at August 5, 2016 (Source: ShareInvestor)

Conclusion

Based on good financial performance, attractive valuation and positive technical outlook, Penta is a good stock for long-term investment. I revised my rating from SELLING INTO STRENGTH to BUY.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

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