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Thursday, May 31, 2018

GHLSYS: Earnings at a New High

Result Update

For QE31/3/2018, GHLSYS's net profit rose 19% q-o-q or 10% y-o-y to RM5.9 million while revenue dropped 6% q-o-q or 12% y-o-y to RM60 million. Despite a -12% -o-y decline in group revenue to RM59.8 million vs RM68.0 million in 1Q2017, the net profit after tax rose due to better product mix as well as better performance from solutions services and TPA divisions whereas shared services were flat. Net margins also improved to 9.8% (1Q17 – 7.8%) due to higher solutions software sales as well as higher TPA transaction fees earned.


Table: GHLSYS's last 8 quarters' P&L

You can see that GHLSYS's profit is now at a new high.


Graph : GHLSYS's las22 quarters' P&L

Valuation

GHLSYS (closed at RM1.44  yesterday) is now trading at a PER of 44x (based on last 4 quarters' adjusted EPS of 3.21 sen). Based on its earning CAGR of 35% over the past 3 years, GHLSYS's PEG ratio is only 1.25x. As such, GHLSYS is deemed reasonably priced

Technical Outlook

GHLSYS is now testing its medium-term downtrend line at RM1.45. If it can break above this level, the stock may go into an uptrend.


Chart: GHLSYS's monthly chart as atMay 30, 2018 (Source: ShareInvestor)

Conclusion

Based on satisfactory financial performance and reasonable valuation as a growth stock, GHLSYS is rated a good stock for long-term investment. If it can break above the RM1.45 level, the stock can go into an uptrend.

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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