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Thursday, December 08, 2016

GHLSYS: Earnings Growth Slowed

Result Update

For QE30/9/2016, GHLSYS's net profit rose 3-fold y-o-y to RM4.7 million on the back of a 16%-crease in revenue to RM60 million. Compared to the immediate preceding quarter last year, GHLSYS's net profit dropped dropped marginally by less than 0.2% on the back of a 3%-decline in revenue.  GHLSYS's revenue rose y-o-y primarily driven by increase in the Transaction Payment Acquisition, Shared Services and Solutions Services divisions of 14.1%, 27.6% and 82.3%. Net profit margins during this quarter improved due to improved operating margins; lower interest expenses; and a more normalized tax rate as compared to QE30/9/2015.


Table: GHLSYS's last 8 quarters' P&L


Graph : GHLSYS's las16 quarters' P&L

Valuation

GHLSYS (closed at RM0.81 yesterday) is now trading at a PER of 31x (based on last 4 quarters' adjusted EPS of 2.60 sen). Based on its earning CAGR of 65% over the past 3 years, GHLSYS's PEG ratio is only 0.5x. As such, GHLSYS is deemed fairly attractive as a growth stock. For more on GHLSYS, check out my earlier post.

Technical Outlook

GHLSYS is now consolidating at the horizontal line of RM0.80. If it can break above the downtrend line, RR at RM0.90, it will continue with its prior uptrend. The main concern is that the support at RM0.80 may be violated, in which case it may drop to the next support at RM0.70.
 

Chart: GHLSYS's monthly chart as at Dec 7, 2016 (Source: ShareInvestor)
 
Conclusion

Based on satisfactory financial performance and attractive valuation as a growth stock, GHLSYS is rated a good stock for long-term investment.

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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