For QE31/3/2017, Notion's net profit dropped 31% q-o-q but rose 41% y-o-y to RM4.4 million while revenue rose 1% q-o-q or 21% y-o-y to RM68 million. Total revenue was flat in the current quarter under review compared to the preceding quarter. Nevertheless, Auto sector registered an increase of 9%, HDD is flat while Engineered Products is 12% negative due mainly to 34% down for Camera whereas Other Engineered Products recorded an increase of 36%. Profit after taxation was RM 4.44 million compared to RM 6.44 million in Q1FY2017 mainly due to unrealized foreign exchange losses. (Notion's latest result was announced on May 23.)
Table: Notion's last 8 quarterly results
Graph: Notion's last 40 quarterly results
Notion (closed at RM1.21 last Friday) is now trading at a PER of 33 times (based on last 4 quarters' EPS of 3.7 sen). At this PER, Notion is deemed overvalued.
Notion rallied after it broke above its long-term downtrend line, RR in November 2016 at RM0.40 (see Chart 1). Right now, Notion is trapped in a flag formation, ABCD (see Chart 2). An upside breakout above RM1.38 or a downside breakout below RM1.18 would point the way forward for the stock.
Chart 1: Notion's monthly chart as at Jun 2, 2017 (Source: ShareInvestor.com)
Chart 2: Notion's daily chart as at Jun 2, 2017 (Source: ShareInvestor.com)
Based on weaker financial performance & demanding valuation, Notion is a stock to be avoided.
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