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Tuesday, March 27, 2018

Gtronic: Life Is Full Of Surprises

Result Update

For QE31/12/2017, Gtronic's net profit rose 74% q-o-q or 293% y-o-y to RM25 million while revenue rose 20% q-o-q or 124% y-o-y to RM105 million. Revenue rose q-o-q  due to the higher volume loadings and mass production of new products from certain customers in the Group. This led to a huge jump in net profit profit  to RM25.0 million from RM14.4 million in QE30/9/2017.

(Note: Gtronic's latest result for QE31/12/2017 was released on February 27.)


Table: Gtronic's last 8 quarterly results


Chart: Gtronic's last 48 quarterly results

Financial Position

Gtroni's financial position is healthy with current ratio at 2.5 times and gearing ratio at 0.4 time.

Valuation 

Gtronic (closed at RM4.52 yesterday) is now trading at a PE of 25 times (based on last 4 quarters' EPS of 18.04 sen). At this elevated PER, Gtronic is deemed fully valued.

Technical Outlook

Gtronic broke the strong horizontal support of RM5.80 on March 1. Then it broke below the intermediate uptrend line, SS at RM5.30 on March 21. Thereafter it quickly broke the next 2 horizontal lines at RM5.15 & RM4.80. It is now resting at the horizontal line of RM4.30. The selldown is likely due to overall poor market sentiment which has dragged down many stocks, including 2 other semiconductor stocks- MPI & Unisem. Life is full of surprises; just when Gtronic starts to deliver the goods, the share price took a plunge!!


Chart 1: Gtronic's weekly chart as at March 26, 2018 (Source: Malaysiastock.biz)

My technical studies below shows the stock has a tendency to go one-up before topping off. Despite the sharp drop, the stock is still trading above its long-term uptrend line with support at RM4.00.


Chart 2: Gtronic's weekly chart as at March 26, 2018 (Source: Malaysiastock.biz)

Conclusion

Based on satisfactory financial performance & position, Gtronic can be a good stock for long-term investment. Since the stock is still trading above its long-term uptrend line, I think it is fairly attractive after the recent selldown. 

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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