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Friday, August 18, 2017

IFCAMSC: Riding The Property Dragon

Background

IFCA MSC Bhd ("IFCMSC") is involved in the provision of IT business solution. Its area of specialty is the property industry where its solutions have found ready acceptance. It has expanded to other ASEAN countries as well as China.

Recent Financial Performance

IFCAMSC's financial performance was on a steady uptrend from 2008 until 2013. In 201, its revenue & profits took off. It peaked in 2015 and crashed down in 2016. The trajectory of its revenue & profits mirrors the health of the Malaysian property market, which peaked in 2015.

The sharp drop in IFCAMSC's profit in FY2016 was due to the following:
1) Drop in revenue due to the slump in the property market; and
2) Recognition of depreciation & amortization charges for developing its online portal Property365


Graph 1: IFCAMSC's last 10 years P&L

Recent Quarterly Result

In QE30/6/2017, IFCAMSC's net profit rose 50% q-o-q to RM2.5 million while revenue increased by 7% to RM20.6 million. In the same quarter last year, the company reported a net loss of RM535k. Revenue increased y-o-y mainly attributable to the higher sales contribution from our overseas segment and this has resulted in a higher profit before tax for the quarter.


Table: IFCAMSC's last 14 quarters P&L


Graph 2: IFCAMSC's last 14 quarters P&L

Financial Position

IFCAMSC's financial position as at 30/6/2017 is deemed healthy with current ratio at 3.9x and total liability to equity at 0.3x. Its cash reserve stood at RM69.6 million or RM0.11 per share.

Valuation

IFCAMSC (closed at RM0.41 yesterday) is now trading at a PER of 26x (based on last 4 quarters' EPS of 1.60 sen) or at a Price to Book of 2.3x (based on NTA per share of 18 sen). IFCAMSC paid out a 0.5 sen dividend last year- a drop from 1 sen dividend paid out in FY2015 & FY2014. If the dividend payment remains at 0.5 sen per share, then the dividend yield is only 1.2%. Overall, IFCAMSC is deemed fully valued. If its profit recovery can continue, then its share price will look more attractive and the price recovery can begin in earnest.

Technical Outlook

IFCAMSC rallied from a low of RM0.10 in 2014 to a high of RM1.80 in 2015- a dream came true for the lucky investors who owned the stock. Its long decline to a low of RM0.25 in 2016 is a nightmare that all investors would want to avoid.


Chart 1: IFCAMSC's monthly chart as at Aug 17, 2017 (Source: Shareinvestor.com)

IFCAMSC may have broken above its downtrend line, RR. If it can surpass the RM 0.50 level (from the line, AB), IFCAMSC recovery may begin.


Chart 2: IFCAMSC's weekly chart as at Aug 17, 2017 (Source: Shareinvestor.com)

Conclusion

Based on improving financial performance and healthy position, IFCAMSC could be 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.

2 comments:

mazda said...

Hi Alex,

May i have your view on Krono?

Thanks a lot.

Cheers!

Alex Lu said...

Hi mazda

I am not familiar with krono. Chartwise, it has pulled back to the support from the horizontal line of RM0.95-0.96. If that support failed, the next strong support from the horizontal line at 0.89-0.90. If the second support failed, you should consider selling your position. Otherwise that could be a good entry to the stock.