Nextnation Communication Bhd (“Nextnat”) is principally involved in the development & provision of engine/solution for mobile gaming as well as the provision of Internet and wireless technologies & related value-added services. The group has developed a full service mobile game engine for interactive mobile game development, hosting & worldwide deployment, which enables it to strengthen its foothold in this fast-growing field.
Business Expansion
To leverage on its successful development of its full service mobile game engine, the group has entered into a few ventures overseas, such as India (via a distribution agreement with Mobile2win), Indonesia (via acquisition of PT Flower and PT Semesta) and China (via investment in Often Reach Investments Limited).
Nextnation’s wholly-owned subsidiary, Ozura Sdn. Bhd. ("Ozura”) has recently been chosen as Excite Japan Co. Ltd's ("Excite Japan") first international mobile game distribution partner. Excite Japan, one of Japan's largest web portals and mobile game providers, is granting Ozura the distribution rights for its premium mobile game titles. Ozura plans to make these games available through its extensive network of distribution channels consisting of major mobile operators and distribution partners in Malaysia, Thailand, Singapore, Indonesia, Philippines, Australia, China, India and the United Kingdom.
Recent Corporate Exercise
Nextnat has just completed a private placement of 25.2 million shares at RM0.56 each. It has also proposed to carry out a Bonus Issue of 1:2 after the completion of the private placement.
Recent Financial Results
Nextnat’s latest result fro QE31/7/06 shows good improvement in its topline & bottomline. Net profit increased by 7.8% q-o-q or 27.2% y-o-y to RM4.8 mil while turnover increased by 31.9% q-o-q or 53.9% y-o-y to RM23.5 mil. Nextnat attributed its better performance to expanded customer base & hence higher demand for its products & services. See the table below.
Valuation
Based on the last 4 quarterly EPS which amounted to 7.1 sen and the share price of RM0.645 as at October 26, the stock is now trading at a PE of 9.1 times. Given the exciting prospect of the group, I think the stock’s current PE multiple of 9.1 times is not high.
Technical Outlook
The stock is currently in a short-term uptrend line, with support at RM0.60. Overhead resistance is at RM0.65. A break above the RM0.65 level could signal the continuation of the stock’s uptrend, possibly at a faster pace. See the chart below.
Chart: Nextnat's daily chart as at Oct 20
Conclusion
Based on the exciting prospect, undemanding valuation & fairly nice technical set-up, I believe Nextnat is an attractive investment for the medium- to long-term investors.
what is your target price of this stock?
ReplyDeletei have been starting to accumulate this stock since last year and it doesnt give me any return until now.
anyway, i am keeping it as i think its going to another gpacket or mtouche in mesdaq.