Thursday, February 02, 2017

Gtronic: Next Upleg Coming? (Updated)

Gtronic is one of the most innovative chip-makers in Malaysia. Its products range includes sensors etc that are used in many devices, such as smartphones. This has led to a steady improvement in its net profit from around RM30 million in FY2007 to around RM70 million in FY2015. As a result, its share price rose from RM1.00 to RM6.00.

In QE31/3/2016, Gtronic’s net profit plunged 79% to RM3.7 million while revenue dropped 34% to RM59 million. Revenue and net profit dropped sharply due to lower volume loading from some of the Group's customers as a result of reduction in end customers' demand and forex loss of RM4.8 million. This led to a sharp drop in Gtronic share price to RM3.00.

In the past 2 quarters, both revenue and profit had recovered somewhat. Today, Gtronic share price broke above the line connecting the peaks for the past 10 months at RM4.20. On the daily chart, we can see that its lagging indicators have turned positive, with MACD in positive territory and ADX trending higher & above the 20 mark.

Chart 1: Gtronic's daily chart as at Feb 2, 2017_2.58 (Source: MalaysiaStock.Biz)

The weekly chart shows the overhead resistance from the horizontal lines at RM4.50 & RM5.00. Note that MACD has crossed above the zero line while ADX is likely to curve upward soon.

Chart 2: Gtronic's weekly chart as at Feb 2, 2017_3.03 (Source: MalaysiaStock.Biz)

If Gtronic can stay above the breakout level of RM4.20, it could be a good trading BUY. For more on this stock, please check out my previous result update when I rated it as a SELL. Don't be deterred by the negative rating as the recent result of MPI has shown us that the performance of the technology sector is still very promising. I will re-examine the earlier rating when Gtronic announces its financial result for QE31/12/2016 in 3 weeks time.

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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