Wednesday, October 31, 2018

Gtronic: Earning Continued to Grow

Result Update

For QE30/8/2018, Gtronic's net profit rose 153% q-o-q or 64% y-o-y to RM24 million while revenue rose 23% q-o-q or 1% y-o-y to RM88 million. Revenue & profits dropped q-o-q due to higher volume loadings from certain customers in the Group as well as better utilization of our operational resources and facilities.


Table: Gtronic's last 8 quarterly results

Quarterly profits rose to the high achieved in QE31/12/2017, despite a lower revenue. This was due to higher profit margins which may not be sustainable.


Chart: Gtronic's last 51 quarterly results

Financial Position

Gtroni's financial position is healthy with current ratio at 2.7 times and gearing ratio at 0.3 time.

Valuation 

Gtronic (closed at RM2.27 yesterday) is now trading at a PE of 37 times (based on last 4 quarters' EPS of 8.98 sen). At this elevated PER, Gtronic is deemed fully valued.

Technical Outlook

Gtronic has been correcting in the past 2 months after it broke its intermediate line, S1-S1 at RM2.60. It is now resting on the horizontal line at RM2.15. 


Chart 1: Gtronic's daily chart as at Oct 30, 2018 (Source: Malaysiastock.biz)

Despite the near-term weakness, Gtronic is still comfortably above its long-term uptrend line, SS.


Chart 2: Gtronic's weekly chart as at Oct 30, 2018 (Source: Malaysiastock.biz)

Conclusion

Based on satisfactory financial performance and strong financial position, Gtronic can 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.

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