Notion announced its results for QE30/6/2010 recently. Its net profit dropped by 76% q-o-q or 73% y-o-y to RM3.0 million while turnover increased by 7% q-o-q or 36% y-o-y to RM61 million. The poor performance was attributable to 3 factors:
1) initial start-up cost of new projects;
2) quality issue in relation to the 2.5" baseplate (HDD component) project; &
3) weaker USD & EURO
Besides the quality issue in relation to the 2.5" baseplate project, Notion may face some problem of declining demand for HDD which was in turn due to a slump in the demand for netbooks. The latter was attributable to a shift in demand from netbooks to iPad. Notion does not expect its net margin to improve in the next quarter.
Table: Notion's last 8 quarterly results
Chart 1: Notion's last 8 quarterly results
Technical Outlook
Notion, which closed at RM1.87 at the end of today, tested its horizontal support at RM1.85 earlier. The horizontal line of RM1.85 is a strong support and it may hold steady for a while. If this level failed, then the stock may test the next two horizontal support at RM1.70 & RM1.50.
Chart 2: Notion's weekly chart as at August 9, 2010 (Source: Quickcharts)
Conclusion
Based on the drastic change of fortune in Notion, one may be better served by being more cautious & wait for the dust to settle before venturing into this stock. The two issues to look out for is the quality issue for the 2.5" baseplate project & the state of demand for HDD.
Dear Alex,
ReplyDeleteCoukd you please give your comment for Supermx? I heard that Supermx will release its 2Q financial result on next week, is it now the best time to buy?
Thank you.
Alex. I'd rather go to the casino in the Highlands. I stand a better chance of making a profit.
ReplyDeleteHi Ethan Lee
ReplyDeleteLike Latexx, Supermx would be announcing its results for QE30/6/2010 shortly. We will have to wait & see how the company fare for that quarter.
Chartwise, the stock's uptrend line support is at RM5.80. A break of that support could send the share to the horizontal line of RM5.00.
Hi Alex,
ReplyDeleteSorry for a question on NTA per share. How to derive at it?
Thanks.
Hi Avatar
ReplyDeleteNTA per share is computed by dividing Shareholders' Funds (less Intangible Assets) by the outstanding Shares. This number is normally given in the financial statements.