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Sunday, June 04, 2017

Penta: Testing Its Recent High

Results Update

For QE31/3/2017, Penta's PBT increased by 27% q-o-q or 120% y-o-y to RM9.3 million while revenue rose 9% q-o-q or 66% y-o-y to RM48 million. Revenue rose q-o-q mainly due to increase in sales contribution from automated equipment segment as a result of continuous increase in demand for the test equipment from semiconductor market (especially the smart device sector). Revenue from both smart control solution system & automated manufacturing solution segments dropped due to lower progress billing and lower demand for the integrated manufacturing solution from customers. (Penta's result for QE31/3/2017 was announced on May 9.)
  

Table: Penta's last 8 quarterly results

 
Graph: Penta's last 17 quarterly results 
 
Valuation

Penta (closed at RM3.54 last Friday) is now trading at a PER of 16.7 times (based on last 4 quarters' EPS of 21.21 sen). Based on strong growth of more than 100% last year, Penta's trailing PER appears attractive. however we have to watch out for the possibility that this may be peak earning.

Technical Outlook

Penta is in a strong uptrend with support at the 30-day EMA line at RM3.15. Immediate resistance is at the recent high of RM3.55. However we can see bearish divergence formed in the MACD & Slow Stochastic indicators.


Chart 1: Penta's weekly chart as at Jun2, 2017 (Source: ShareInvestor)


Chart 2: Penta's weekly chart as at Jun2, 2017 (Source: ShareInvestor)

Conclusion

Based on good financial performance, attractive valuation and positive technical outlook, Penta is a good stock for long-term investment. After a strong price run-up, I revise the rating from BUY to HOLD.

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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