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Wednesday, December 07, 2016

Innity: Earnings Breaking To New High!

Background

Innity is involved in the provision of online advertising solutions.Its tagline is Right Audience, Real Engagement (or, RARE). [Note: You may check out my first post on this stock.]



Result Update

For QE30/9/2016, Innity's net profit rose 94% q-o-q or 121% y-o-y to RM2.9 million while revenue rose 13% q-o-q or 38% y-o-y to RM26 million. Revenue grew y-o-y due to higher revenue from all the segments, except Indonesia segment. PBT increased y-o-y due to higher revenue and higher product margin achieved. To get a real sense of how well Innity is doing, I strongly recommend that you read Item B.1 Review of Performance on Page 6 of the latest Notes to the Account.


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

More importantly, you should note that Innity has an earning breakout last quarter. I define earning breakout as a quarterly earning that surpasses previous quarterly earning. In the past, I have noted stocks with earning breakouts and they had generally continued to report rising earning going forward. Consequently, these stocks enjoyed higher share prices. Innity may join this list of outperforming stocks.


Graph 1: Innity's last 34 quarters' P&L

Valuation

Innity (closed at RM0.67 yesterday) is now trading at a PER of 18.3x (based on last 4 quarters' adjusted EPS of 3.66 sen). Based on CAGR of 70% over the past 3 years, PEG ratio is still comfortably well below 1x. As such, Innity is very attractive for a growth stock. However, Innity has a serious problem with liquidity; it can be not traded on a quiet day!!

Technical Outlook

Innity seems to be in an upward channel, with support at RM0.35 & resistance at RM0.75.


Chart: Innity's monthly chart as at Dec 5, 2016 (Source: ShareInvestor)
 
Conclusion


Based on good financial performance, attractive valuation & relatively positive technical outlook, Innity is 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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