For QE31/1/2019, Redtone's net profit increased by 116% q-o-q or 7-fold to RM5.4 million while revenue rose 52% q-o-q or 66% y-o-y to RM45.4 million. Revenue rose q-o-q due to higher revenue from Managed Telecommunication Network Services ("MTNS") segment. The Group's profit before tax rose q-o-q due to higher revenue in the MTNS segment (see Table 2 below).
Table 1: Redtone's last 8 quarterly results
Table 2: Redtone's segmental results for QE31/1/2019
From Table 3 below, we can see that MTNS segment is now catching up with the Telecommunication Services segment. If MNTS segment can match the performance of the Telecommunication Services segment, Redtone's bottom-line will be much better than what's it like today.
Table 2: Redtone's 9-mth segmental results
Graph: Redtone's last 32 quarterly results
As at 31/1/2019, Redtone's financial position is healthy with current ratio at 2.5 times and gearing ratio at 0.4 time.
Redtone (closed at RM0.26 yesterday) is now trading at a trailing PE of 14 times (based on last 4 quarters' EPS of 1.79 sen). At this PE, Redtone is still deemed attractive for a turnaround stock with room for further growth.
Redtone has broken above its downtrend line at RM0.24 on March 13. If it can also take out the immediate downtrend line, RR with resistance is at RM0.32-0.33, Redtone's uptrend may begin.
Chart: Redtone's weekly chart as at Mar 19, 2019 (Source: Malaysiastock.biz)
Based on the turnaround story, exciting future prospects, healthy financial position and mildly bullish technical outlook, Redtone could be a good stock for long-term investment.
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