Elsoft Research Berhad ('Elsoft') is involved in the research, design and development of test and burn-in systems and application-specific embedded systems. It provides products for semiconductor, opto-electronic (such as image sensors) and automation industries (such as lighting).
Historical Financial Performance
Elsoft's top-line and bottom-line grew at a rapid pace in the past 6 years.
Graph 1: Elsoft's last 14 years' P&L
Recent Financial Performance
In QE30/9/2018, Elsoft's net profit rose by 13.6% q-o-q or 61.7% y-o-y to RM13.6 million while revenue rose 1.3% q-o-q or 47.1% y-o-y to RM24.5 million. Revenue rose q-o-q mainly due to greater demand from smart devices industry and continuous demand from automotive and general lighting industry. The increase in revenue led to increase in profits.
Table: Elsoft's last 8 quarters' P&L
Graph 2: Elsoft's last 24 quarters' P&L
Elsoft's financial position as at 30/9/2018 is deemed very healthy with current ratio at 4.6 times and gearing ratio at 0.2 time.
Elsoft (closed at RM1.42 last Friday) is now trading at a PER of 17 times (based on last 4 quarters' EPS of 8.25 sen). Based on last 5 years' earnings CAGR of 30%, Elsoft's PEG ratio stood at only 0.6 time. At this PEG ratio, Elsoft is deemed fairly attractive for a growth stock.
Elsoft is in a gradual uptrend in the past 5 years- reflective of its steady earning growth.
Chart: Elsoft's weekly chart as at Nov 16, 2018 (Source: Malaysiastock.biz)
Based on good financial performance and position, attractive valuation and bullish technical outlook, Elsift is a god stock for long-term investment.
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