For QE30/6/2017, Vitrox's net profit increased by 15% q-o-q and 48% y-o-y to RM21million while revenue increased by 12% q-o-q or 37% y-o-y to RM78 million. Both revenue and profit before tax have recorded an increase of 12% and 16% respectively. The increase in PBT was due to increase in revenue recorded for Machine Vision System (MVS) and Automated Board Inspection (ABI) plus other operating income generated from grant income.
Table: Vitrox's last 8 quarterly results
Chart 3: Vitrox's last 39 quarterly results
Vitrox (closed at RM4.80 uesterday) is now trading at a PE of 30 times (based on last 4 quarters' EPS of 15.96 sen). At this PER, Vitrox is deemed fully valued. [Note: Vitrox has completed its 1-for-1 bonus issue in early July. Like most listed companies who carried out their bonus issue, the date of the bonus is conveniently put right after the end of a financial quarter. This gives rise to misleading comparison between EPS & share price. If you are not an existing shareholder, you will compare the share price with the reported but unadjusted EPS and come to the wrong conclusion on valuation.]
Vitrox rose sharply after it broke above the RM2.00 horizontal line in late February (which coincided with its strong result for QE31/12/2016). The rise went exponential when the company proposed its bonus issue in May.
Chart 1: Vitrox's weekly chart as at Aug 17, 2017 (Source: Shareinvestor.com)
Vitrox may be pressing against the upper line of its upward channel. This line may act as a resistance, capping its upside until it has been taken out.
Chart 2: Vitrox's monthly chart as at Aug 17, 2017 (Source: Shareinvestor.com)
Based on improving financial performance & bullish technical outlook, Vitrox could be a good stock for long-term investment. However, it may be a good idea to take some profit as the share price upside may be constrained by technical resistance.